This document discusses Russia's fiscal policy challenges in the context of economic stagnation or modernization. It notes that government revenues and spending increased rapidly from 2001-2012 but then revenues declined sharply in 2014-2016. The floating exchange rate has helped cushion the impact of falling oil revenues on the government budget. Targets have been announced to gradually reduce the government deficit to around 1% of GDP per year. Efforts to balance the budget will focus on increasing revenues from smaller taxes and improving collection while containing growth in public sector wages, pensions, and some categories of spending. Military expenditures increased substantially in some years but appear to have leveled off.