Fiscal policy remained stimulative in 2025, but the room for further stimulus has narrowed
The consolidated budget in 2025 was executed with a deficit of 0.8% of GDP. Fiscal stimulation of domestic demand resulted in expenditure growth outpacing revenues. Consolidated budget expenditures exceeded 30% of GDP for the first time since 2010. Accumulated fiscal reserves will allow maintaining the current high level of government spending in the coming years, provided there are no major shocks. Prospects for increasing budget revenues are assessed as subdued amid the reached limits of extensive output growth and the expected slowdown of GDP growth to 0.5–1.5% per year in 2026–2027. As a result, the consolidated budget is projected to remain in deficit at 1–1.5% of GDP in 2026–2027.
Public debt decreased by approximately 3.7 p.p. in 2025 – to about 26.4% of GDP at the beginning of 2026. The size of public debt and the scale of debt servicing payments (around 5% of GDP in 2025) are not large; however, even this volume of payments requires refinancing a significant portion of them to avoid significant fiscal adjustments. With continued financial support from Russia, debt sustainability will be maintained in the medium term even under a risk scenario. However, the room for fiscal maneuver remains limited.