Russia sky-high budget deficit has caused it to liquidate a portion of its gold reserves and foreign exchange, as income from oil and gas sales dwindles. To close Russia’s billion-dollar national budget hole, authorities took decisive action in January to tap into their gold and currency reserves.
Russia Sells Gold and Yuan to Close Trade Deficit
In accordance with the Tass Russian news agency, Russia’s Ministry of Finance issued a statement claiming that in January alone, they had sold 2.27 billion Chinese yuan (approx 309 million euros) on the foreign exchange market and an astonishing 3.6 tons of gold amounting to 200 million euros! All these funds were directed towards covering up the existing state budget deficit.
The government recently released financial data indicating that the January budget deficit was a staggering 1.76 trillion rubles (23 billion euros), and spending had risen to an astonishing 3.1 trillion rubles (40 billion euros). This increase of 59 percent from last year’s figures demonstrates just how exorbitant these costs are.
War Costs and Economic Sanctions Make Things Difficult for Them
The Russian Ministry of Finance has not revealed the cause for their additional spending, yet it is likely attributed to the invasion of Ukraine that has continued for almost a year. Due to economic and financial sanctions imposed on Russia, fewer resources are available as revenue sources. According to an official report, state budget income from oil and gas dropped by 46% in just one year’s time.
In the months to come, foreign exchange reserves and even gold reserves can be used. Russia currently holds 10.4 billion euros, 307.4 billion yuan, and 551.2 tons of gold in its Ministry of Finance coffers, as reported by them.
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