RUSSIAN ECONOMY BLEEDING TO DEATH FROM SANCTIONS AND PRICE CAP

It's taken a bit of time but it looks like Western sanctions against Russia are finally starting to bite, with Russia now spending unsustainable amounts of money against sharply falling revenues. 

As reported by the Wall Street Journal:

Russia’s government budget plunged into a deeper deficit in February, heaping pressure on the Kremlin to square the ballooning costs of its war in Ukraine with falling oil revenues caused by a raft of Western sanctions. [...] The government’s budget deficit rose to $34 billion for the first two months of the year, Ministry of Finance data showed Monday, up from $25 billion in January. That means that the shortfall has nearly hit the government’s full-year target of around $39 billion—or about 2% of Russia’s expected gross domestic product—in just the first two months of the year. 

Russian income from gas and oil has been devastated since new price-cappping measures were introduced in December:

While Russian oil has continued to flow—the country’s exporters have been able to divert barrels to China, India and Turkey—its price has declined as Moscow loses its bargaining power on the global market. Russia’s flagship Urals blend traded at under $50 a barrel in February, according to the Russian Ministry of Finance, a deep discount to global benchmark Brent crude which fetches around $80 a barrel.

Russia is desperately trying to fill the funding hole by liquidising its National Wealth Fund. In January it sold 38.5 billion roubles worth (around US$5 billion) of Chinese yuan and gold to cover the deficit.

The National Wealth Fund, built from previous oil-and-gas sales and used as a rainy-day fund, stood at $147 billion on March 1, the equivalent to 7.4% of projected GDP. That is down from $175 billion, or 10.2% of GDP, before the invasion.

The Kremlin is fast running out of room for economic manoeuvre, and will have to cut spending across the board while raising taxes, if it wants to continue its occupation of Ukrainian territory. But such a combination of cuts and tax hikes could see opposition to the Putin regime kickstarted into life.