Putin in turmoil as Russian economy takes £46billion blow

Russian state TV New Year special with Kremlin propagandists

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Russia’s achieved an unwanted economic record in December as Moscow was forced to borrow £46billion in one month. This comes as the country continues to grapple with Western sanctions.

Russia’s oil revenues have dropped and Putin’s military continues to suffer logistical issues in Ukraine.

The Kremlin’s finance minister Anton Siluanov confirmed this deficit which equates to roughly 2.3 percent of Russian GDP (gross domestic product).

This also means that Russia’s spending is more than 30 percent higher than had been forecast at the start of 2022.

Russia had aimed to keep its spending surplus at no higher than one percent

In November, Russian oil revenues fell despite the country increasing its production. The International Energy Agency (IEA) reported that Russia earned just under £13billion from oil sales that month, the second lowest of 2022 behind £12.2billion in September.

Prior to the invasion of Ukraine in February, the European Union imported around 40 percent of its gas from Russia.

However, the bloc and other Western allies have looked to reduce their dependence on Russian gas while also hitting Putin with severe sanctions.

The IEA now predicts that Russia’s oil output will drop by 1.4m barrels per day in 2023.

They add: “While lower oil prices come as a welcome relief to consumers faced by surging inflation, the full impact of embargoes on Russian crude and product supplies remains to be seen.”

As the Telegraph reports, the Kremlin has already started to reduce or delay non-war spending to balance the books.

The country has had to borrow heavily in recent months to divert more funding toward its military operations.

Despite Russia’s challenging economic outlook, Putin was defiant last month as he boasted there will be “no limits” to his war spending.

He said: “We have no limits in terms of financing. The country and the government are providing everything that the army asks for — everything.”

Putin also spoke confidently about how Russia’s goals in Ukraine will “certainly” be achieved.

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He compared Russia’s invasion of Ukraine to the country’s role in World War 1 and World War 2, as well as Moscow’s war against Napoleon’s French forces in 1812.

While Putin spoke with defiance, the Russian military has endured a number of setbacks throughout the conflict.

Putin’s men have lost territory near Kharkiv, in the Kherson region and also failed to take the Ukrainian capital Kyiv at the start of the invasion.

Soledar, in the eastern city of Donetsk, has become the latest of a number of key battlegrounds. Putin ally, Yevgeny Prigozhin, claimed that his private military mercenaries – the Wagner Group – has taken the town.

However, the Kremlin has been more tentative, with spokesperson Dmitry Peskov saying: “Wait, let’s not rush, let’s wait for official statements [by the Ministry of Defense].”

Ukraine has disputed the claim by Prigozhin, saying that the fighting is still ongoing and that Russia has suffered big losses.

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