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Russia Faces Increasing Financial Pressure From War Against Ukraine
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![Photo of Ivan Khomenko]( "Photo of Ivan Khomenko")
Russia is facing growing financial difficulties in sustaining its war against Ukraine, as the cost of continued aggression places increasing pressure on state finances.
According to Bloomberg, the Russian government is preparing for a possible breach of its planned budget deficit in 2026, driven by soaring defense expenditures and declining oil and gas revenues.
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Moscow is reportedly seeking up to 1.2 trillion rubles (approximately $16 billion) in additional revenue to maintain its budget deficit within the planned 1.6% of GDP, Bloomberg said, citing unnamed sources familiar with internal discussions. Without these funds, the fiscal gap could widen substantially, further stressing government finances.
One of the major contributing factors is the weaker-than-expected performance of the energy sector. The price of Urals crude oil continues to fall below the budgeted benchmark, and the Russian ruble remains stronger than forecast—both of which undercut export revenues.
As a result, Russia’s oil and gas income may fall short of projections by more than 2 trillion rubles (around $22 billion).
To address these shortfalls, the Kremlin has increasingly relied on domestic borrowing. However, Bloomberg notes that raising capital through internal debt markets is becoming more costly and less sustainable.
While the official budget deficit appears manageable on paper, Bloomberg points out that Russia was already forced to revise its fiscal outlook several times in 2025.
The country’s National Wealth Fund, a key reserve for covering budget gaps, is approaching its liquidity threshold. This limits the government’s ability to draw on reserves and leaves borrowing as the primary option.
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Despite the mounting economic pressure, Bloomberg reports that the Kremlin remains firm on its territorial demands in ongoing negotiations with Ukraine and the United States. Russian officials continue to insist that Ukraine cede the Donbas region, signaling no immediate willingness to de-escalate.
Sources cited by Bloomberg suggest that a combination of sanctions, revenue shortfalls, and growing fiscal limitations is gradually narrowing Vladimir Putin’s “window of opportunity” to prolong the war without triggering serious domestic consequences.
Earlier, The Times reported that Russia has fallen far behind in the global AI race, largely due to Vladimir Putin’s personal aversion to modern technology. Putin reportedly avoids smartphones and the internet, relying instead on landlines and paper briefings—an approach that isolates the Kremlin from digital innovation and undermines Russia’s competitiveness in artificial intelligence.
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