Sanctions are slowly draining Russia's economy. The first “bells” sounded already in January, and it will only get worse.
Oleg Pendzin, an economist, spoke about this Channel 24. It is known that in March 2023 Russia plans to reduce oil production by about 5% against the backdrop of sanctions from the EU and the G7 at the maximum price for Russian oil products.
How sanctions will hit Russia's budget
Pendzin recalled that in January Russia faced a state budget deficit of 1.8 trillion rubles, or about $24 billion. It is important that they do not have the opportunity to enter the global financial markets to borrow money. Therefore, they are forced to take funds from the “welfare” fund, where there are about 9.5 trillion rubles.
If they use the fund at such a rate, then it will be completely exhausted in them at the beginning of the summer, roughly speaking. Then they definitely will not have anywhere to cover the deficit. And it will hit the programs funded by the budget, – said Pendzin.
The first is the program of social payments. The second is a program that turns into state orders for machine-building enterprises, equipment repair and war support.
If the war goes on for more than 3 months, then there is a confrontation not only between armies, but also between economies. It will be very difficult for Ukraine, but there is help from partners. Russia is unable to receive assistance. I think that the losses of the Russians will be even greater,” Pendzin emphasized.
Analysts said back in November that the greatest level of decline in the Russian economy was expected in March-April 2023. Restrictions on petroleum products have been in effect since February 5, and approximately 35% of Russia's budget is petrodollars. Therefore, we can expect that the budget deficit of the occupiers will only grow.
How Russia will be affected by the embargo of oil products
- Sanctions on Russian oil from the G7 countries, the USA and Australia have been in effect since December 5 2022. Since February 5, EU sanctions have also been imposed on oil products.
- Reuters, citing a Russian official, notes that the EU embargo on oil products from Russia could hit the country's economy more than oil restrictions. Therefore, in the aggressor country, a 15% decrease in oil refining is predicted due to sanctions.
