The country’s budget deficit rose to 10.5% of gross domestic product in February from 4.2% in January, as revenues contracted even as expenditures were slightly reduced.
Russia’s revenues were hit by lower prices of oil, one of the country’s key exports, along with shrinking revenues from collection of taxes, such as value added tax, according to Vladimir Kolychev, chief economist at VTB Capital.
A faster-than-expected spending of military expenses exacerbated the problem, Mr. Kolychev said. This could be a temporary development and the budget deficit is likely to shrink in the second half of the year, he added.
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The budget pattern underpins the broader economic trend in Russia. Its economy is expected to contract by 3% in 2015 as the key drivers—consumer demand and investment activity—are likely to spend the year in negative territory.