War costs strain Russia's finances

Since April 2026, Russia has imposed strict restrictions on government spending due to a liquidity crisis resulting from deteriorating financial conditions, despite increased energy revenues from the war on Iran. The Russian budget balance at the treasury has fallen to an unusual negative of 5.5 trillion rubles (approximately $65.3 billion), reflecting mounting financial pressures. The government reduced funding by about 35% in the unprotected budget, except for military and social program expenditures, and moved to cut staff numbers by 15% and delay non-essential expenses. Although the fiscal deficit has worsened to $77.2 billion (2.8% of GDP), the government affirms that military spending will continue for several years, while attempting to adapt to the slowing economy and rising debts in the regions.

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