The Kremlin is reportedly preparing to implement emergency budget cuts as the Russian government grapples with a severe budget deficit. According to the economic newspaper Vedomosti, the Finance Ministry has requested all ministries and agencies to outline plans for cutting expenditures by approximately 10%. These cuts are critical given the alarming fiscal situation in Russia, where government revenues have drastically fallen due to plummeting oil and gas revenues, among other factors.

Despite the impending cuts, military and security expenditures, along with certain protected outlays such as social benefits and support for families involved in the war in Ukraine, will remain untouched. This indicates the government’s prioritization of defense spending amidst ongoing conflicts, asserting its commitment to national security over other public expenditures. Currently, defense and war-related spending constitutes a staggering 38% of Russia's budget for the year, underscoring the financial strain on the country’s economy.

The severity of the cuts stems from the federal budget's alarming deficit, which stood at around 3.45 trillion rubles (approximately 37.6 billion euros) for January and February alone, nearly equal to the total projected deficit for the entire year. The income generated during the same period was significantly lower than the expenditure, with revenues recorded at 4.76 trillion rubles against expenses of 8.21 trillion rubles. This situation has raised concerns about the sustainability of Russia's finances as it navigates through ongoing sanctions and economic challenges resulting from the conflict in Ukraine.