The Audit Chamber, Russia’s government spending watchdog, said the country saw a massive drop in budget revenues from selling oil and gas. In 2020, these were just a fraction of the federal budget while a relatively modest increase in non-related revenues failed to make up for this loss.
Russia's Audit Chamber said in its 2020 budget report that last year was tough for the country and its energy sector. The share of "oil and gas" revenues dropped to 28 percent from 39 percent in 2019. This is bad news for the state authorities that see oil and gas revenues as of crucial importance for Russia. The drop in their budget share stemmed notably from more modest profits that stood at 7.924 trillion roubles in 2019 and 5.235 trillion roubles a year later. Back in 2019, these were 9.018 trillion roubles. The country is unable to plug the gap with any other source of income. The only solution is to tap the rainy day fund that is made up of oil and gas revenues. But it is plunged into a crisis, too. Throughout 2020, it was expected that Russia's National Welfare Fund would receive cash from selling oil and gas above the price of $42 per barrel. Nonetheless, it noted 320 billion roubles worth of loss instead of projected revenue of 2.334 billion roubles. What were the reasons behind a massive drop in revenues from both extracting and selling hydrocarbons? This was due to a drop in oil prices worldwide, OPEC+ oil curbs, coronavirus pandemic, and the decrease in gas exports. In April 2020, the price of Urals crude fell to an all-time low of $16.3 per barrel. This was lower by a third compared to 2019 throughout the whole year – $41.4 against $63.9 per barrel.
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