Russia to spend over $32.3 billion to support economy under sanctions

Russia has drawn sanctions from the US and its allies following its attack in Ukraine (Image: Reuters)

Russia plans to spend over 2.5 trillion roubles ($32.3 billion) on supporting its economy that has been targeted by unprecedented western sanctions, Finance Minister Anton Siluanov said on Tuesday.

Russia faces soaring inflation and capital flight while grappling with a possible debt default after the West imposed harsh sanctions to punish President Vladimir Putin for sending tens of thousands of troops into Ukraine on Feb. 24.

"In total, the financial support for the plan exceeds 2.5 trillion roubles. This includes budget allocations, the National Wealth Fund, and the tax incentives we have adopted," Siluanov told a government meeting on Tuesday.

This year, Russia will be able to channel around 6 trillion roubles on financing budget spending and paying debt after it had suspended the budget rule that used to channel extra revenues from oil and gas exports into state coffers, the Higher School of Economics (HSE) think tank said on Tuesday.

But the figure could be substantially lower if potential sanctions hit Russia's ability to sell oil and gas abroad, the HSE said.

Foreign sanctions against Russia have already frozen about $300 billion of the roughly $640 billion Russia had in its gold and forex reserves when it launched what it calls its "special military operation" in Ukraine.