Putin Is Plunging Russia Into Record Debt Because of the War – Bloomberg

Against the backdrop of ongoing hostilities in Ukraine, the Russian Federation is rapidly increasing its national debt. This is undermining one of the key macroeconomic advantages that Vladimir Putin has publicly boasted about for years—a low debt level compared to other G20 countries. 

The aggressor’s financial stability is now under threat due to several critical factors:

• Colossal debt servicing costs: According to analysts’ estimates, over the next ten years, the Kremlin will be forced to spend at least 15% of its GDP solely on interest payments on public debt. This amount is effectively equal to the country’s current total debt. In 2026 alone, nearly 4 trillion rubles are planned to be allocated to debt servicing, which accounts for about 9% of the entire federal budget.

• Rapid growth of the budget deficit: In the first five months of 2026, Russia’s budget deficit rose to 6 trillion rubles (2.6% of GDP), which is 60% higher than the government’s limit for the entire current year.

• Need for new borrowing: Since military spending in 2026 is likely to exceed initial plans by 4–5 trillion rubles (an increase of nearly 40%), the Russian Ministry of Finance will have to raise at least 2–3 trillion rubles on the domestic market in addition to the planned 4 trillion.

The situation is complicated by the fact that, with the start of the full-scale invasion, the cost of servicing the debt for the Russian government has already doubled, and the country has effectively reached the statutory upper limit on public debt, forcing the Kremlin to finance the war effort through borrowing at increasingly higher interest rates.

This is according to Bloomberg.

The IMF forecasts record growth in Russia’s national debt in the coming years.

As a reminder, Russia is experiencing a deteriorating economic situation and rising risks of loan defaults.

After three years of unexpected economic growth, Russia is facing a sudden slowdown—war expenses, inflation, and falling oil prices have begun to weigh on an economy that, until recently, seemed resilient to sanctions.

Consumer lending in Russia has fallen to a six-year low.