If You Think the Russian Government Is Doing Just Fine Because of Oil/Gas Revenues…

Here’s some data, from BOFIT, “Russian federal budget revenues continue to deteriorate,” published today:”


Nominal revenues to the federal budget in June were up by a meagre 1.5 % y-o-y. This translates to a very large drop in real terms as the 12-month rise in consumer prices and industrial producer prices averaged 14 % in June.

Revenues from production and export taxes on the oil & gas industry, which are largely set based on global prices in dollars, were now up by just over 10 % y-o-y.

22 thoughts on “If You Think the Russian Government Is Doing Just Fine Because of Oil/Gas Revenues…

  1. Macroduck

    Can’t wait for Johnny to tell us how very very wrong the data are and how you are western economist so don’t know anyyin about Russia and “Look over there!”

    1. Moses Herzog

      Magician hand tricks?? That’s almost giving JohnH too much credit for being that sophisticated. Oh man, Macroduck, you’re so dead on accurate it really makes me smile/

      Nope, I mean this is one of the FEW things I will give credit to “pgl” and Professor Rosser “catching on to” before me. In his early days here, I totally bit down on the fish hook with JohnH asking “sincere” questions etc.

  2. Barkley Rosser

    I have a suspicion Menzie is posting this partly due to me making noises about unreliability or believability of data about the Russian economy. I note that BOFIT is a research arm of the Bank of Finland, and I shall grant that they are probably better informed than most sources. I shall also grant that probably official Russian data is more reliable now than official data used to be in the old days of the Soviet Union.

    That said, I shall throw out there that in fact official data in the old Soviet Union really was quite awful. Yes, on this matter I am drawing on those inside sources that a certain regular commenter here mocks. But this is a matter that even now most here really do not get. I remember when the Soviet Union collapsed, and it came out that its economic data on many things was seriously exaggerated, many in the US criticized the CIA for not forecasting its collapse and for apparently overestimating the size of the Soviet economy. However, I happen to know that during the later part of the Soviet period even those who were involved in the central planning of the Soviet economy so disbelieved the data they got from ministries and enterprises in the Soviet Union that they used CIA data themselves for their planning as superior to their own.

    As I stated, I am sure the data in Russia is more accurate now than it was in the Soviet period. But I also know that not only have there been some holdovers of previous practices, there has been some tendency in recent years under Putin to revert back to Soviet practices on many fronts, his general “re-Stalinization.” BOFIT may be pretty well informed about the Russian economy, but I am not in a position to say if they are better informed about it now than the CIA used to be about the old Soviet economy, which turned out not to be all that well informed, even though the Soviets themselves thought they were better informed than the Soviets themselves were.

    Needless to say, if the BOFIT data is accurate or not too far off, then the Russian budgetary situation is worsening while not in a state of imminent collapse. Their more serious economic problems in the short run are more likely to involve some very specific shortages due to reduced imports that may be negatively affecting some very specific sectors tied to their military production or activities, but on those matters I make no claims of any sort of inside information.

    1. Menzie Chinn Post author

      Barkley Rosser: The post was just to respond to those arguing little impact on the Russian economy. I would be interested in seeing alternative measures based on alternative series, big data etc. (e.g., Fernald et al. for China), but haven’t seen any published estimates.

      1. Moses Herzog

        If Russians were living “in the shit” 6 months ago, living “in the shit” 3 years ago, “living in the shit” 10 years ago~~How is life different for Russians now?? does any of this “upset” Russians?? The point is who/ which western nations is/are funding Putin’s war, while Russians are apathetic to anything and everything, and a war of murder and rape rages onward. Who is arguing the Russians are living 1920s America now?? Nobody I know–the point is the funding of the war, and it’s still happening. I don’t think I disagree with you that often Menzie, but It’s like 20 people got bombed in Ukraine just now, and you’re saying “See?? none of this is moving the stars of the night sky.” Who CARES?!?!?!?!

    2. Ivan

      I think it was either Russian missiles or drones that were found with chips from washing machines. They also appear to be out of precision ammo – just as our deliveries of those to Ukraine have ramped up. As they say, one smart bomb is worth as much militarily as 10 dumb bombs. I think they will run out of personnel and military stuff before they run out of money.

      1. 2slugbaits

        Russian logistics was always crap and Russian materiel was always overrated. Reports are that the Russians have been reduced to using some very old and inaccurate Soviet era missiles, which could explain why they no longer even try to hit militarily significant targets. They’ve also consumed a lot of their operational readiness with weapon system platforms that never had a high degree of readiness anyway. The pathetic performance of the Russian army strikes me as more of a reason to trim NATO spending than as a reason to increase it. And Lavrov’s “threat” to expand the war was a joke. Lavrov and Putin just whistling past the graveyard. Putin is taking whatever monies he gets from oil and gas sales and pissing it away on a war that he’ll probably end up losing.

        1. Ivan

          One thing that will come out of this war is a much more detailed understanding of how pathetic the Russian conventional military forces are. We have gotten the opportunity to test their weapons, tactics, logistics and command structure – all had been way overrated.

          It is pretty clear that what you need to defend against conventional Russian attacks is a lot of missiles and drones. Since drones only survive in battle for about a week, you need a very large stockpile and a plan to increase production as soon as hostilities begin. Armed drones are expensive so it’s better to mostly use guided missiles and precision munition – combined with information from small drones and satellites. We are getting to know a lot more about their electronic warfare (in)abilities and probably need to make sure precision munition are build to resist any of those abilities (AI-based autonomy from they leave the barrel).

          1. Ulenspiegel

            “We have gotten the opportunity to test their weapons, tactics, logistics and command structure – all had been way overrated.”
            Logistics were always seen as issue, not enough trucks for the large number of artillery pieces and tanks. The aspect what is missing in your list is obviously command culture, as long as that does not change, the Russians are stuck between a rock and a hrad place.

            “It is pretty clear that what you need to defend against conventional Russian attacks is a lot of missiles and drones.”
            Good SP howitzers with enough ammunition would also work. Rocket assisted rounds have a 100km range.

          2. baffling

            but they have shown they still have skill in siege tactics. that is why nations that border Russia have concerns-think khazakstan. Russia may not be able to defeat a well armed country, but they sure as hell have shown they have the capability to lay waste to what remains. and the willingness to do so. the battle in Ukraine is sending a message to former satellite states. it is one of the few things Putin is accomplishing in this immoral war. the war in Ukraine is serving as a proxy for military action in Central Asia.

          3. Ulenspiegel

            ” …but they sure as hell have shown they have the capability to lay waste to what remains. and the willingness to do so….it is one of the few things Putin is accomplishing in this immoral war. the war in Ukraine is serving as a proxy for military action in Central Asia.”

            The question here is was the result worth the costs – IMHO not. Sweden and Finnland as new NATO countries hurt Russia a lot, Russia lost the ability for some games in the Baltic Sea. The other aspect is of course how long it will take to replace the losses of the army. Russia is not able for a larger operation in the next5 years. And very important for me: potential enemies have learnt how to fight a infantry depleted Russian army with militia and anti-tank weapons. Artillery requires huge transport volume and only works with secure hinterland as siege artillery….

    3. baffling

      “many in the US criticized the CIA for not forecasting its collapse and for apparently overestimating the size of the Soviet economy. ”
      don’t take this as a conspiracy theory, but the cia was better off if the Soviets were well funded. it was in there self interest to promote a vital Soviet Union, not a weak one. my guess is their analysis was biased as such, but not at the level of a conspiracy theory.

  3. pgl

    “The budget revenue outlook for the rest of this year is lame.”

    Expect some tirade from JohnH which will assuredly also be lame.

  4. Bruce Hall

    It would be interesting to compare that to the US.

    The absolute level of revenues and spending might be important, too.

    I suspect that getting precise and correct government economic data out of Russia might be as problematic as getting it out of China. But the surplus/deficit equations may be secondary to whether they can continue to operate as they want to. The US has no regard for its own deficits as long as other countries ignore them as well because of the dollar’s dominance. Russia doesn’t have that luxury which may be the basis for their demand that other countries pay in rubles.

    1. pgl

      The absolute level of revenues and spending might be important??? Now you are a master of saying really dumb things but DAMN! Spending/GDP, tax revenues/GDP? HELLO? Or maybe you are so dumb that your think Russia’s GDP is on par with that of the US.

      But I bet Putin has an extra bone for his pet poodle for the deficit comparison. Good buy Brucie – support your favorite war criminal. But wait – you have not told us the debt/GDP ratio for Russia. Oh yea – you do not want to anger your master as you really want that bone!

  5. Ivan

    I would not doubt that the official numbers are somewhat doctored to leave a “stronger” impression than reality. It would be better to make the West & Ukraine think the sanctions are less effective than they are.

    However, Putin will be fine in the short run, because he can force or persuade the population to take the pain as long as it is seen as an existential fight against the evil West/US. Putin can do things to his population that no democratically elected President, in a country with a free press, would be able to get away with. He actually think that is one of Russia’s/his strengths that will allow him to “hold out” and win in the long run. He has already signaled this ability by passing laws that allow him to turn factories into old style USSR war machines.

    The fact that Putin only has a 10% increase y-o-y in oil and gas income suggest a very substantial reduction in actual volume of sales. The current efforts to increase world supply and reduce demand will move prices lower and soon give him a negative y-o-y. However, he can just print more Rubbles. The sanctions on hydrocarbons are going to be much more hurtful in the long run than in the short run. It will force NATO/EU to stop buying from Russia and replace hydrocarbons with alternative energy. THAT will be the real effects and it is pretty much unstoppable and irreversible even if Putin play nice and continue to deliver some natural gas to Europe this fall. Hydrocarbon prices are already falling as a result of Biden’s policies and brilliant international politics.

    1. Macroduck

      Russia’s oil and gas sector has relied on foreign technology to maintain productivity (however unimpressive). It’s an open question whether Russia can maintain output under sanctions.

  6. Moses Herzog

    David Letterman: We’ve done over 6,000 shows…….. And I was here for most of them….. [laughs} and I can tell you a pretty high percentage of those shows, ……… absolutely sucked, ……. and also in light of that praise “merited” or NOT……. do me a favor….. save a little for my funeral…. alright??? I’d appreciate it……

  7. Jacob



    “Actually, the Russian Economy Is Imploding
    Nine myths about the effects of sanctions and business retreats, debunked.

    Five months into the Russian invasion of Ukraine, there remains a startling lack of understanding by many Western policymakers and commentators of the economic dimensions of President Vladimir Putin’s invasion and what it has meant for Russia’s economic positioning both domestically and globally.

    Far from being ineffective or disappointing, as many have argued, international sanctions and voluntary business retreats have exerted a devastating effect over Russia’s economy. The deteriorating economy has served as a powerful if underappreciated complement to the deteriorating political landscape facing Putin.

    That these misunderstandings persist is not entirely surprising given the lack of available economic data. In fact, many of the excessively sanguine Russian economic analyses, forecasts, and projections that have proliferated in recent months share a crucial methodological flaw…”

    1. Olaf Kunert

      “Overall, Russia needs world markets far more than the world needs Russian supplies; Europe received 83 percent of Russian gas exports but drew only 46 percent of its own supply from Russia in 2021. ”

      Such stupid argument spoils the article. It is actually about the ability to compensate for the finacial losses by Russia and the ability to compensate for the physical delivery of NG by Europe, especially Germany. In case of NG Russian actually conducts successfully asymmetric warfare, NG is more important for Europe than the money for Russia. Without (cheap) NG some important industrial production is hit hard.

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