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Under pressure from sanctions and with oil and gas revenues declining, Russia’s economy is unable to sustain the costs of the war. Even in regions that previously benefited from increased military spending, the economic crisis is deepening, Bloomberg reports. The local industrialists’ association is sounding the alarm, as Freedom reports, despite the Kremlin’s reports of GDP growth, the real sector is in deep crisis .
By the end of 2025, the combined deficit of Russia’s regional budgets had increased 3.5-fold compared to the previous year, reaching 1.5 trillion rubles. This figure became a record high for the entire period of observation, according to calculations by the ACRA agency based on data from the Unified Budget System Portal. The sharp increase in the deficit occurred because the regions, with total revenues of 22.5 trillion rubles, spent 24 trillion. As a result, 74 regions faced a budget gap, compared to 50 the previous year. Moscow had the largest deficit. The Kremlin is already unable to fully cover social benefits. All of this is the consequence of reduced budget revenues.
"There’s an official Russian budget forecast that says Russia will be short of money by 2042. I’m not saying this; it’s the Russian government. And they’re planning to increase the debt by a minimum of eight times, and a maximum of 15 times. This is what Russia will be taking from its own economy to support its budget and finance the war. Naturally, this will destroy the economy, and the only solution then is to transform Russian life into a labor camp like North Korea," noted Igor Lipsits, Doctor of Economics and Professor.
Russia is on the brink of a food crisis, according to the Ukrainian Foreign Intelligence Service. According to its data, agricultural machinery sales in Russia have fallen by a quarter, and the depreciation rate of the combine harvester fleet has already exceeded 50%. The rate of equipment replacement is three times lower than required. In this case hunger is expected to drive the people to revolt.
"Sales of agricultural machinery have fallen by 25%. Depreciation of the machinery and tractor fleet exceeds 50%, while the replacement rate is only 3.5%, compared to the standard of 10%. According to market estimates, the agricultural sector is short of approximately 62,000 tractors and 34,000 combine harvesters, indicating a structural shortage of technical resources. The financial situation is also deteriorating. The high discount rate reduces industry revenue by $5-8 billion annually. Crop production profitability has fallen to 15-16% in 2025, and grain production has become unprofitable. Export duties further reduce revenue by $2-3 billion annually," reports the Foreign Intelligence Service of Ukraine.
Russian dictator Putin is leading the country toward bankruptcy, just as Soviet leader Leonid Brezhnev once did. Polish Foreign Minister Radosław Sikorski stated this during his speech in the Sejm.
According to the head of the Polish Ministry of Foreign Affairs, at least 800,000 Russians fled the country in the first year of the war alone. Companies have lost access to Western markets due to sanctions. And military spending consumes up to 40% of the budget. Economically, Sikorski says, the Russian Federation has already lost and will not recover anytime soon.
"Russia has made a historic mistake. It is sacrificing its future on the altar of a futile war. The Russian dictator has confused his ego with the interests of his country. We have significantly contributed to slowing Russia’s advance and weakening its economy. We have frozen approximately $340 billion in Russian Central Bank reserves because sanctions are a working tool. If Moscow had not started the war in 2014, its GDP would be 20% larger today," stated Polish Foreign Minister Radosław Sikorski.
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