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Russia’s current-account surplus dwindled over the first quarter of this year by $51 billion compared to this quarter last year, Russia’s central bank data shows, as the country struggles to maintain oil revenues in the face of sanctions.
The surplus shrank 73 percent to $18.6 billion in the first quarter—the smallest quarterly surplus in seven years. The central bank said on Tuesday that it is now forecasting the full-year surplus to dip to $66 billion from more than $227 last year.
The reason behind the drop in its current-account surplus was “a drop in the trade balance as a result of a significant decrease in the cost volumes of exports, mainly due to a decline in prices.”
Russia was forced to heavily discount its Urals crude oil blend after the ban on seaborne oil imports and the price cap imposed on the nation after it invaded Ukraine.
The shrinkage in the account surplus has created an even bigger budget deficit, as lower realized prices for its crude oil met up with big spending on its war in Ukraine.
Russian President Vladimir Putin, however, said he expects a turnaround in its oil revenue by the second quarter as oil prices rise.
Sofya Donets, Renaissance Capital economist, feels otherwise and was quoted by Bloomberg as saying, “The current-account surplus in the second quarter will be less than in the previous quarter, and probably the weakest during the year, which will determine the continued high volatility of the ruble.”
Yesterday, Russian Energy Ministry figures showed that Russia had reduced its crude oil production by 700,000 bpd in March after warning that it would do so back in February.
The International Monetary Fund (IMF) said on Tuesday that Russia could see an even greater budget deficit and smaller current-account surplus this year due to global isolation and lower energy revenues. The IMF sees Russia’s economic output sagging, and by 2027, the IMF expects the country’s economic output to be 7% lower than forecast made prior to its invasion of Ukraine.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.