For several years already, every autumn, Russia’s finance ministry has performed the same ritual. It unveils a budget that looks sober, even responsible, with a shrinking deficit and falling inflation. Every year, it is ignored by reality. The budget for 2027, outlined at the end of last week, is no exception.

The headline promise is a deficit of 2.2 per cent of GDP next year, about 5.5 trillion roubles (£49 billion), down from roughly 3 per cent expected this year. Revenues are to rise by 7.5 per cent, which after inflation is barely 1 per cent. Spending will grow by less than 6 per cent, which after inflation is a cut of about 1 per cent. For the first time since the invasion of Ukraine, the government even plans to start refilling the National Welfare Fund, the country’s rainy-day savings. Two-thirds of that fund has already been spent keeping Russia’s war economy afloat.

Vladimir Putin is mortgaging Russia’s future to pay for his present geopolitical aims

Vladimir Putin is mortgaging Russia’s future to pay for his present geopolitical aims

It all sounds admirably prudent – and it would be if anyone believed it. The finance ministry’s plan assumes that the economy will grow by 1.4 per cent next year. The central bank expects growth of 1.2 per cent, and the OECD a mere 0.6 per cent. It assumes inflation will fall from 6.8 per cent at the end of this year to the 4 per cent target by the end of 2027. Ordinary Russians, who see the prices in the shops every day, disagree. They expect prices to rise by 14.2 per cent over the next year and reckon those they already pay are climbing at 15.1 per cent. Only the forecast for the price of oil is cautious – but the rule that once tied spending to oil revenues has been suspended until 2029, allowing the government........

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