Russia’s economy has demonstrated impressive resilience in the face of Western sanctions, so far. Forecasts of gross domestic product (GDP) downturn have been consistently revised on the upside, and inflation, though high, is lower than in Italy and in line with global trends.

This resilience stands in stark contrast to the consensus in the immediate aftermath of Russia’s invasion of Ukraine that unprecedented Western sanctions would at least give the Kremlin pause. While observers knew the export controls on key technologies and inputs would take time to bite, it was hoped that the financial sanctions and the blocking of the Central Bank’s reserves would be so disruptive that Russia just might reconsider. Many, including this author, fell for this kind of reasoning.1
However, the factors that have spared Russia an immediate financial crisis and allowed it to finance the war are relatively few, and not guaranteed to remain in place. Many good recent reports delve deeper into production and how export controls are running down inventories and damaging entire sectors. This report takes a different tack by looking at the Russian government and the Central Bank’s management of oil and gas income, and how they’re preparing for the years to come. Difficulties are likely to compound as income falls and spending increases.

Official databases now feature obvious and deliberate gaps. The Central Bank of Russia (CBR) stopped publishing important time series relating to reserves at the onset of the war, while the customs authorities stopped updating the detail of trade volumes. Yet, there is still enough available in terms of raw data—and via official reports—to get a reasonable idea of what is going on.