Could Russia Run Out Of Cash On Sanctions?

The Russian public budget surplus has significantly fallen in the latest signal that its finances are feeling the pain from sanctions and this is partially why the Kremlin shutting off gas supplies to Europe.

The budget surplus narrowed to 137bn roubles (£1.9bn) in the first eight months of 2022, a sharp fall from 482bn roubles in year-to-date data the previous month. Russia’s public finances have been bolstered by soaring energy prices boosting revenues since it invaded Ukraine.

But economists warned Russia’s surplus will likely turn to a deficit in September as government revenues are hit by shrinking energy sales to Europe. Revenues from energy could be squeezed further as gas prices continue to slide.

Benchmark gas prices in Europe fell a further 9pc to their lowest level in a month today as the EU drew up proposals to avoid a winter energy crisis, including measures to curb power demand. Gas prices slipped to €192 per megawatt hour, down more than 40pc on the highs reached in August.