MOSCOW, June 10 - Russia's parliament on Wednesday passed legislation that removes the need for the traditional, time-consuming process of formally amending the budget law when the government needs to boost borrowing or spending.
Under the new rules, the government can exceed the debt ceiling set in the budget law and increase expenditure without triggering the prior sequence of parliamentary hearings and amendments that in past years could stretch over months. The change also means adjustments to debt and spending plans will no longer be made public.
The shift arrives against a backdrop of fiscal strain. In the first five months of the year, Russia ran a budget deficit equal to 2.6% of gross domestic product, higher than the annual target of 1.6% of GDP. The government has pointed to increased military spending to sustain the war in Ukraine as a primary driver of higher outlays.
Officials from the Finance Ministry said the larger deficit was influenced in part by advance payments on state contracts. "The bill gives us greater flexibility to manoeuvre quickly in changing conditions, which is necessary so that we can respond to changes that are now occurring not every month or quarter, but virtually every day," Deputy Finance Minister Irina Okladnikova said.
Finance Minister Anton Siluanov has indicated the deficit outlook will remain elevated, saying last week that the 2026 deficit will be larger than planned. He added the increase in borrowing next year will not match last year's jump, when debt issuance rose 46% to 7 trillion roubles. For the current year, borrowing is planned at 5.5 trillion roubles.
The formal removal of the parliamentary amendment requirement shortens the route for fiscal adjustments. Previously, changing limits on debt or revising spending plans necessitated modifying the budget law and submitting those changes to public parliamentary hearings, a process that could delay implementation.
Russia has already taken other measures this year to shore up revenues. The government raised value-added tax earlier in the year to help cope with mounting military expenditures. At the same time, the Finance Ministry said that higher prices for Russian commodities stemming from the war in the Middle East provided some temporary fiscal relief, prompting a postponement of spending cuts that had been under discussion in February before U.S. and Israeli strikes on Iran.
Officials have also revised the timeline for achieving a primary budget balance, which excludes debt servicing costs. The Finance Ministry shifted the target to 2029. The central bank warned that moving the primary balance target out could hinder the pace of interest rate cuts that the slowing economy needs.
Context and implications
- The new law accelerates the government's ability to respond to rapidly changing fiscal demands by allowing borrowing and spending increases without amending the budget law.
- Budget metrics have deteriorated year-to-date, with a 2.6% of GDP deficit through May, above the 1.6% annual target; advance payments on state contracts were cited by the Finance Ministry as contributing to the shortfall.
- Commodity price movements related to conflict in the Middle East have offered the government temporary revenue relief, delaying previously discussed spending cuts.
This legislation changes the transparency framework for fiscal adjustments by removing the requirement that changes to debt and spending plans be made public through parliamentary hearings.