Russia cuts key projects in aviation, tech, auto industries as oil revenues plummet
The Russian government is slashing budgets for major projects across a number of sectors in response to plummeting revenues from oil and gas, the pro-Kremlin news outlet Kommersant reported on May 22.
Earlier this month, oil prices in Russia dropped to a two-year low. Prices fell below $50 per barrel — about 40% lower than what was planned in the Russian budget, Reuters reported on May 6.
In response to the price collapse, the Kremlin has introduced sweeping budget cuts to several state programs, Kommersant reports. These include programs to develop Russia's aviation, automotive, tech, shipping, and robotics industries.
The state will cut an aviation development program by 22%, reducing the original budget of 101.2 billion rubles to 78.8 billion. The aim of the program was to replace Western aircraft with Russian planes.
Read also: Ukraine's new drone strategy — cripple Moscow's airports, make Russian population 'pay'
A program aiming to increase the output of Russia's civilian goods by 40% by the year 2030 has also been targeted for funding cuts and is set to lose 66.9 rubles in 2025.
Funds for the nation's "high-tech industries" will lose 46 billion rubles, the automotive industry will be slashed by 35 billion rubles, and support for "the production of innovative transport" will drop by 25 billion rubles. Funds for the production of ships and ship equipment will lose out on 12.6 billion rubles.
A program to boost the production of industrial robots will lose nearly a third of its budget (1.7 billion out of 5.6 billion rubles).
The Russian state statistics agency Rosstat reported on May 16 that the country is experiencing a significant downturn in economic growth, exacerbated by oil prices, Western sanctions, and inflation.
Oil and gas revenues accounted for nearly 30% of Russia's budget in January and February, according to government data cited by Bloomberg. Moreover, income from fossil fuel exports is a key funding source for Russia's full-scale war against Ukraine.
Soaring military expenditures have strained the Kremlin's budget even as Western sanctions increasingly target Russia's "shadow fleet" of oil tankers and the nation's gas exports.
Read also: Editorial: Russia just said it doesn't want peace. This is what you need to do
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