Moscow: In a significant fiscal policy shift, Russian President Vladimir Putin has signed a decree to increase the country's value-added tax (VAT) rate from 20% to 22% starting January 1. This change aims to address the mounting budget deficit Russia faces.

According to Anadolu Agency, the decree was published in Russia's legal information system, confirming that the VAT rate will rise at the beginning of the New Year. However, the rate will remain at 10% for certain socially important products, providing some relief to consumers on essential goods.

Russia's Finance Ministry has reported that the budget deficit has surged to 4.2 trillion rubles (approximately $52 billion) in the first ten months of the year. This deficit is attributed to increased government spending, which has expanded notably in recent times, particularly for defense-related expenditures.

Moreover, sanctions imposed on the Russian energy sector have exacerbated the economic challenges by cutting off access to the European oil and natural gas market, further straining the country's financial resources.