Russian budget deficit widens as drone strikes hit fuel supplies

Russian officials told Bloomberg that defense spending has pushed the budget shortfall 50 percent above the full-year forecast. The deficit through April reached 5.9 trillion rubles. The reserve fund has fallen 60 percent from prewar levels.

Gross domestic product contracted in the first quarter. Officials lowered the 2026 growth projection to 0.4 percent from an earlier 1.3 percent estimate. Growth had exceeded 4 percent in 2023 and 2024 before slowing to 1 percent last year.

Ukrainian drones struck a refinery and naval shipyard near St. Petersburg earlier this week. Almost all major oil refineries in central Russia have halted or scaled back output. Fuel is being rationed in Moscow and parts of northern Russia. Russian-occupied Crimea has run out of fuel after repeated drone attacks on supply trucks.

Authorities have restricted gasoline sales in Luhansk and Kherson. The Institute for the Study of War reported that diesel shortages are beginning to affect military vehicles.