Russia last year saw a budget
deficit of 3.3 trillion rubles ($43.6 billion), or 2.3% of GDP. This year, the Finance Ministry is planning for a deficit of 2% of GDP (2.9 trillion rubles) — but economists are doubtful that it can be achieved. Instead, they predict the deficit will come in at somewhere between 3.1 trillion and 6.9 trillion rubles.
The authorities will close that hole by borrowing on the domestic market. The Finance Ministry is already issuing bonds, which are redeemed by the banks using money from the Central Bank. This looks a bit like new money and some economists
suspect the Central Bank of printing money. We explain whether this is really happening — and the risks.