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Russia has posted its greatest current account surplus in nearly three decades, thanks to a jump in earnings from oil and gas exports. The increase in oil and gas exports coincided with a drop in imports because of sweeping sanctions over its Ukraine invasion.
The current account keeps track of a country's goods and service imports and exports, as well as payments to foreign investors and transfers like foreign aid. When the value of exports exceeds the value of imports, a country has a current account surplus.
In the first quarter of this year, Russia's current account surplus was $58.2 billion. This was more than double the $22.5 billion it brought in over the same period the previous year.
Russia's role as an energy producer accounts for the surplus. Despite sanctions and boycotts, Russia's energy exports will bring in approximately $321 million in 2022, up 36% from 2021. This is because oil prices have reached 14-year highs this year.
The European Union (EU), a major Russian energy customer, has not fully cut off Russia's energy exports. The EU agreed on an embargo on Russian coal last week. The EU is also considering an oil embargo, although natural gas has not been mentioned.
Since Russia invaded Ukraine, the EU has already paid $38 billion for Russian energy. This has contributed to a modest increase in Russia's foreign-exchange reserves.
High oil and gas prices have also aided the Kremlin in bolstering its emergency government reserves, with 273.4 billion rubles ($3.2 billion) from oil and gas sales.
Russia's bank accounts look to be holding intact despite broad Western sanctions. To fight new sanctions, Russia, as above, says it will add $3.2 billion in oil and gas earnings to its emergency reserves. Nevertheless, Russia's GDP is set to collapse by 11.2% in 2022, and the country's oil and gas revenues in March were 38% lower than the finance ministry had predicted.
