Russia Faces Deepening Fiscal Crisis as War Spending Overwhelms Budget
Russia is plunging deeper into economic turmoil as ballooning war expenditures, inflation, and mismanaged spending have pushed the Kremlin into a severe fiscal crisis. In the first four months of 2025 alone, the country recorded a staggering 3.2 trillion ruble deficit, raising alarms about the long-term sustainability of Moscow’s wartime budget.
Despite official claims that revenues are increasing at a rate of 5%, spending continues to surge far beyond forecasts. Economists warn that even if authorities allow the deficit to expand by an additional 1 trillion rubles, total expenditures for the year would still show only a modest 2% increase — far below the trajectory set by current spending patterns.
To meet its 2025 budget targets, the Kremlin would need to slash expenditures by 2% compared to last year. But when adjusted for inflation, that amounts to a real-term cut of 12% — a drastic and politically dangerous step in a country already grappling with the social and economic fallout of its war in Ukraine.
To meet its 2025 budget targets, the Kremlin would need to slash expenditures by 2% compared to last year. But when adjusted for inflation, that amounts to a real-term cut of 12% — a drastic and politically dangerous step in a country already grappling with the social and economic fallout of its war in Ukraine.
The numbers expose a regime trapped by its own aggression: forced to choose between further domestic austerity or printing more money to finance its war. Both paths risk accelerating inflation, weakening the ruble, and fueling public dissatisfaction.
Moscow’s propaganda may claim resilience, but the economic data tells a different story — one of a state bleeding cash to sustain a war it cannot afford, with fewer and fewer options left on the table.
The news comes after Tatneft reported massive losses while the OPEC+ agreed to turn up the tap in a blow to Moscow.