Russia Has Launched A "printing Press"
- 24.11.2025, 18:13
There's not enough money for the war anymore.
The Russian financial authorities have started to use money issue by the Central Bank to finance the budget deficit, which will amount to almost 6 trillion rubles this year, experts of the Gaidar Institute write.
"The hole" in the treasury this year is almost completely covered by the issue of government debt - federal loan bonds (OFZ), which are placed weekly by the Ministry of Finance. In the first quarter it placed such securities for 1.4 trillion rubles, in the second - for 1.46 trillion, in the third - for 1.55 trillion, writes The Moscow Times.
OFZs are bought mainly by banks, mainly large and state-owned. The Central Bank, in turn, provides money to the banks. Since the end of last year, it has been conducting weekly repo operations, offering credit organizations ruble loans secured by OFZs. According to the Central Bank's own data, as of November 24, the volume of such transactions reached 2.832 trillion rubles.
The increase in the volume of OFZ in the banks' assets is due to repo transactions, and this is in fact "indirect issue financing of government debt by the Central Bank of the Russian Federation," experts at the Gaidar Institute say. Expansion of such practice "increases the pro-inflationary effect," they warn.
Budget for 2026-28, the Ministry of Finance made up with a "hole" of more than Br10 trillion: Br3.8 trillion next year, Br3.2 trillion in 2027 and Br3.5 trillion in 2028. The Gaidar Institute points out that the Ministry of Finance plans to place OFZs worth Br4-4.7 trillion (excluding repayments) every year.
The authorities initially budgeted only Br1.2 trillion for this year's deficit, but were forced to increase the estimate almost five times after oil and gas revenues collapsed by 20% and the plan for non-resource taxes failed.
The budget will collect Br1.3 trillion less in VAT than expected, Br328 billion less in import duties and excise taxes, Br160 billion less in income tax, Br36 billion less in personal income tax, and Br888 billion less in utilization tax. The slowdown in the economy, falling corporate profits and reduced exports due to sanctions have had an impact, explains Emil Ablaev, an expert at the Central Moscow International Finance Center.
Despite the worsening budget situation, Vladimir Putin will not run out of money in the near future, says Alexandra Prokopenko, a research fellow at the Carnegie Russia Eurasia Center.
"For the next 12-14 months, Putin has enough money to continue the war with the current level of spending. (After that) he will have to make a hard choice between continuing the war effort and maintaining consumer affluence so that people don't feel 100 percent that there is a war going on," Prokopenko notes.