The wealth fund is emptied: Does Russia on the way to a credit crisis

A breakdown The war onUkraine, Russia Removed at a pace with her national wealth fund. From the liquid assets that were 8.7 trillion Rubel in February 20, less than half, and at the same time the debts of the non -financial corporations jumped, mainly due to policy of co -loans to the security industries. Now, experts inHarvard Warn that the combination of the foundation and the increase in corporate debt threatens to lead the country toCredit crisis.

At the beginning of the war, Russia has passed a series of laws designed to maintain the economy, one of which requires banks to provide loans in preferred conditions for security corporations, for the purpose of upgrading and expanding the relevant production lines to war. Through these loans, Russia accumulates “shadow duties” worthwhile (tens of billions of dollars) in the debts of the non -financial corporations. Along with an increase in government debt and other obligations, the total debt in Russian economy jumped 22 trillion Rubel ($ 225 billion).

Danger: Hyper Inflation

“Initially, this budgetary security funding program seemed to be an advantage by allowing Moscow to maintain the official level of security at a management,” Dr. Craig Kennedy from the Davis Institute writes at Harvard University, in a budget published for research on Russia’s hidden duties. ” Expect to think that Moscow does not have significant risks to its ability to fund the war. However, recently its heavy leaning on the coordinated loan program has begun to bring about acute consequences. Not only does she bring toinflation And to raise InterestShe also creates the threshold conditions for a systemic credit crisis. ”

i.e, Insolvency Of security corporations, or worse – banks. This will force Russia to put a hand in the main pocket or print money in a way that can lead to hyper -inflation.

In order to screen the effects of war from the home front, Russia does not declare a general reserve recruitment. Instead, she is increasingly paying for soldiers who will recruit their will. “Still, people don’t come, because life expectancy on the Ukrainian front is very short. “Political science, government and IDF at Tel Aviv University.

Even worse: The Russian security industry is also required for particularly extensive manpower to meet production goals, which results in the “war war” against the industry with grants and extreme salaries, which are high as many of the average annual salary in Russia. The army part is funded by the defense budget (8% of the product and 32% of the budget for 2025), but the industry’s part is funded by banks to banks, which the government imposes to give loans. The debts of the non -financial corporations in Russia jumped 44% since the beginning of the war.

One of the direct effects is that the Russian economy is moving into a “overheating” state, in which the economic activity that is dictated from above brings inflation. Today, it is 9.5% according to the official statistics, and sites that independently examine the level of prices in Russia even indicate a higher rate. The Central Bank of Elvira Navulina recently warned the Russian Parliament that “when the economy reaches the limit of its production capacity, but demand is still intercellular – steago.” That is, economic stagnation and monetary inflation.

One way to moderate the influence is the sale of CEO from Russia’s wealth fund. The central bank interest rate for 21%, a record of more than 20 years, but this only exacerbated the problem of corporate debts, whose repayment ability is diminishing. Which puts a systemic risk to credit in Russia.

“At the end of 2024, the Kremlin becomes more aware that the budget financing plan creates risks disruptive to the financial system, such as particularly high interest rates and liquidity problems and reserves in the banks. , Writes Dr. Kennedy.

Moscow’s dilemma

“Moscow is now facing a dilemma: the more it rejects a ceasefire, the greater the risk that credit events, such as corporate rescue and banks, will increase in uncontrollable and weaken Moscow’s leverage in negotiations. The wake -up dilemma will probably affect Russia’s war calculations, and offer an unexpected leverage in negotiations for Ukraine and daughters, “Dr. Kennedy concludes.

In the meantime, large corporations in Russia such as construction corporations and even the Gazprom oil and gas company suffer from difficulties and have to go out in cuts. The construction industry has an acute lack of workers due to the war, and the final stop of Russian gas exports to Europe earlier this year led another blow to profits. But in the meantime, the Russian War machine continues to function.

“What Russia is doing is called ‘financial suppression’, is a sort of centralized planning of economic resources typical of war economy,” says Israeli specialist for debt crises. “While Russia ‘enjoys’ a particularly low product ratio, it is not necessarily due to responsible conduct but rather a lack of demand for the Russian government’s debts. Beyond inflation it creates in the short term, the great danger is of course the collapse of corporations or banks. Can prohibit deposits and provide liquidity.

According to him, Russia’s main way to fund it will be “inflation on its various forms.” The inflation tax is the one who will eventually take on the Russian citizens, so those who do not enjoy the salary leaps in the army and the industry will suffer from it – and this is an impact that is no longer given to the back of the home front. “In practice, it is impossible to predict the breaking point – when it is ceiling and in what power,” he concludes.