Russia’s current account surplus shrinks by 73%

The current account surplus of Russia has declined by 73% to $18.6 billion on an annual basis in January-March, the country’s central bank said on Tuesday. The fall has been attributed to the sharp decline in energy revenues, which was down 45% in the first quarter.ussia

The central bank has blamed price caps and embargoes on Russian oil and gas products for this phenomenon. Russia had achieved a record high in its current account surplus in 2022 due to a fall in imports and robust oil and gas exports, which kept foreign money flowing despite Western efforts to isolate the Russian economy over the conflict in Ukraine.

After the troops were sent to Ukraine more than a year ago and Western companies exited the country, imports had collapsed. However, imports have steadily recovered since then, exacerbating the problem. The current account, which measures the difference between all money coming into a country through trade, investment, and transfers, and what flows back out, had stood at $69.8 billion in January-March 2022.

The central bank had lowered its current account surplus forecast for 2023 to $66 billion from $123 billion in February. Meanwhile, Russia has stopped disclosing its net capital outflow data. The fall in energy revenues and recovery in imports could cause the country’s fiscal safety net to fray, which could create a challenging situation for the economy. As a result, the government may need to take steps to bolster the fiscal safety net and protect the country’s financial stability.