ChloeTzang
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Putin's $52B Deficit EXPLODES: Reserves Dry
Russia is spiraling into a systemic financial crisis as the colossal cost of the war economy hits critical mass. The Bank of Russia has been forced to maintain the key interest rate at a suffocating 21%, a historic high that defies political pressure and effectively shuts down the civilian sector by pushing commercial borrowing rates past 25%. This desperate monetary policy struggles to contain the extreme inflation fueled by unchecked military spending, generating a deep recessionary pressure on non-military industries.
Simultaneously, the federal budget deficit has ballooned dramatically, nearly doubling this year to 5.7 trillion rubles as war expenditures soar. This massive fiscal shortfall is compounded by a catastrophic oil revenue slump. Ukrainian drone attacks have successfully paralyzed up to 40% of the country's primary refineries, causing diesel exports to drop to a five-year low and fundamentally crippling a core revenue source for the nation’s GDP.
The state's financial distress and sweeping foreign sanctions have a direct, chilling effect on Russia's ruling elite. This economic turmoil is rapidly shrinking the wealth of the country's richest. A major group of at least 38 of Russia's wealthiest oligarchs has reportedly seen catastrophic losses in their total holdings due to the toxic combination of tight monetary policy, war-fueled instability, and asset freezes in the West. Their diminished financial power reflects the decay at the top of the Russian financial ecosystem, threatening the long-term stability of the Kremlin's inner circle. The Kremlin is cornered: it cannot lower rates without triggering hyperinflation, while the Finance Ministry is running out of resources to fund the war machine without collapsing the non-military sectors. This perfect storm confirms that the financial foundation of the Russian state is unstable.
