Russia’s financial problems are deepening by the day. In just five months, the balance of the state treasury has dropped by 3 trillion rubles (≈$37.5 billion).
From the end of December to the end of May, the treasury’s balance fell from 11.5 trillion rubles (≈$143.75 billion) to 8.5 trillion rubles (≈$106.25 billion). The reasons are clear: falling budget revenues and rising war expenditures. The result is a massive and growing budget deficit—3.3 trillion rubles (≈$41.25 billion) in just the first five months. By June’s end, it is expected to rise by another 0.5–1 trillion rubles (≈$6.25–12.5 billion).
To cover this, Russia’s Ministry of Finance has ramped up the issuance of OFZs (federal loan bonds) at a dramatic pace.
Since the start of the year, the volume of bonds in circulation has grown by 2 trillion rubles (≈$25 billion). For comparison, in prior years, this figure was typically 2–3 trillion (≈$25–37.5 billion) for an entire year. This surge has occurred before even reaching the halfway point of 2025.
Meanwhile, the market conditions for Russia’s key export commodities—oil, gas, coal, and metals—offer no relief. Prices are hovering near five-year lows, slashing potential revenue.
The treasury balance functions as the Kremlin’s central wallet.
From it flow pensions, salaries for teachers, healthcare spending, and education budgets. It also funds the war: paying soldiers, buying shells, tanks, and missiles.
A steep decline in this balance is not just a warning—it is a signal of state-level insolvency. When the state cannot meet its obligations, it edges closer to collapse.
The size of the treasury balance is perhaps the most important metric of the regime’s viability. Its fall is no longer a red flag—it’s a siren.
There are only two paths forward, both disastrous:
- Cut spending, which would amount to de facto surrender while fighting a war.
- Accelerate bond issuance, which risks ruble devaluation and runaway inflation.
The Kremlin shows no signs of rational economic policy. Instead, Russia is heading at full speed into a concrete wall.
And that’s not the end of it. The state is now burning through its National Welfare Fund (NWF) to keep major banks and companies afloat. In May alone, $4.2 billion was spent to prop up collapsing institutions. The NWF’s liquid assets fell from $40.3 billion to $36.1 billion. At this rate, it will be empty by year’s end.
Ironically, the NWF cannot legally be used to cover the budget deficit. So the government squeezes state-owned companies to fund the budget—and then uses the NWF to bail them out.
And the list of those needing rescue grows longer each day:
- coal companies
- real estate developers
- metallurgical firms
- agriculture
- farm equipment makers like Rostselmash
- automakers like AvtoVAZ and KAMAZ
- and many more
This is an avalanche. Every solution spawns new crises. The Kremlin has no good options left—only bad ones and catastrophic ones.
The Russian economy is entering a phase of systemic failure. What began as stress on the treasury has now spread to banks, industry, and social services. As the war drags on and income dries up, Russia is running out of both money and time.
