Putin Has Been Warned About The Onset Of A Large-scale Economic Crisis In Russia
- 5.02.2026, 19:30
The crisis could come as early as summer.
Pumped with trillions of dollars in spending on defense contracts and payments to frontline recruits, Russia's military economy is nearing the breaking point.
Government finance officials have warned President Vladimir Putin that the country could face an economic crisis in the coming months. This was reported by The Washington Post, citing a source in direct contact with these officials.
The WaPo interlocutor said the warnings to Putin are becoming more and more insistent, and the crisis, according to the officials, could come as early as summer. Putin has been warned that without further tax hikes, the budget deficit will continue to grow because of falling oil and gas revenues, and the banking system is under increasing pressure because of high interest rates and large amounts of loans to finance the war, WaPo wrote.
The crisis is "three to four months" away, a Moscow businessman told the publication. According to him, there are more and more signs of inflation much higher than the 6% declared by the authorities, despite the record-hard policy of the Central Bank of Russia with a key rate of 16%. The future crisis is also indicated by the forced layoffs of thousands of workers and a record wave of restaurant and bar closures in Moscow since the pandemic, the WaPo source said.
After two years of military boom, when GDP grew more than 4% a year, the Russian economy has fallen into a severe depression. Last year, growth slowed to 1%, 20 of 28 civilian industries began to decline, and companies - from small to large - began having massive debt repayment problems. According to the Central Bank, more than 10 trillion rubles of loans on bank balance sheets became problematic. In fact, a latent banking crisis has begun in the country, experts from the Central Bank of Russia warned in February.
The Russian budget, despite two waves of tax increases, this year may have an astronomical deficit of 10 trillion rubles due to the reduction in oil purchases by India and discounts under $30 per barrel (according to non-public calculations of the government). And if we compensate for the falling oil and gas revenues at the expense of the National Wealth Fund, we will have to spend almost all of the fund's free money - 4.1 trillion rubles.
A new "serious threat" to the Kremlin could be the European Union's measures against the "shadow fleet," a source close to Russian diplomats told WaPo. In January, 14 EU countries signed a joint action agreement against false-flag tankers, effectively threatening to close the Baltic Sea, Russia's main channel for exporting oil abroad. As part of the 20th package of sanctions, the EU wants to completely ban maritime transportation of Russian barrels and related services, which would jeopardize half of its oil exports, WaPo writes.
"This is a threat not only to the economy, but also a political question of how Russia can allow such a thing to happen without losing its political reputation," a diplomatic source told the publication. In addition, new energy sanctions could be imposed by Donald Trump if he believes "Russia is sabotaging the peace process," he added.