Russia is running out of money!
Russia faces seven consecutive years of high budget deficit (over 2%) — streak unseen since 1999, with 2025 deficit projected at 2.6% of GDP and government abandoning goal of keeping it below 1% — The Kyiv Independent. 1/
Russia faces seven consecutive years of high budget deficit (over 2%) — streak unseen since 1999, with 2025 deficit projected at 2.6% of GDP and government abandoning goal of keeping it below 1% — The Kyiv Independent. 1/
Economist Benjamin Hilgenstock says 2026 deficit projection of 1.6% is wishful thinking — deficit of 2-3% of GDP is a lot for Russia since it doesn't have access to financing like normal countries. 2/
Rostec CEO Sergey Chemezov admitted in August profitability of production remains low, and somewhere even zero, if not negative, leaving not too many funds for development. 3/
Several major regions — including Saint Petersburg, Samara, Tatarstan, and Bashkortostan — slashed recruitment bonuses for volunteer fighters, in some cases fivefold. 4/
National Wealth Fund's liquid portion dwindled to 4.2T rubles ($50B), far short of 5.7T rubles ($70B) deficit expected for 2025 alone. 5/
Domestic borrowing functionally impossible as yields on 10-year bonds exceed 15% — high cost of debt servicing offsets amount that can be raised. 6/
Government's only remaining option is monetary emission — "de facto Central Bank credit to government," says opposition politician Vladimir Milov. 7/
Economist Vladimir Dubrovskiy warns: "Large-scale domestic borrowing would immediately remind Russian elites of disastrous 1998 financial collapse, which was caused by same type of deficit financing at high interest rates." 8/
Milov says gas supplies to Slovakia and Hungary, plus LNG exports to Western Europe, bring Gazprom well over half of its total profit — urges Europe to accelerate phasing out Russian energy by 2027-2028. 9X
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