Russian Regions Enter Fifth Year Of War With Record Financial Hole

The financial deficit has reached an all-time peak.

The growing problems in the economy due to the war and sanctions have hit the financial stability of Russian regions. According to the results of 2025, the aggregate deficit of regional budgets increased 3.6 times compared to the level of the previous year and reached Rb 1.478 trillion. As a result, the indicator became a record for the entire period of observation. This follows from the ACRA agency's calculation based on data from the Unified Budget System Portal, writes "Kommersant".

The sharp increase in the deficit was due to the fact that the regions spent Rb 24.1 trillion (plus 4% by 2024) with total revenues of Rb 22.6 trillion (plus 4% by 2024). As a result, 74 regions faced a "hole" in the budget against 50 a year earlier. In absolute terms, Moscow had the largest deficit (Rb 299bn). Then Yamalo-Nenets (Rb 84bn) and Khanty-Mansiysk (Rb 72bn) districts follow with a large gap.

While PIT receipts grew (by 12% or Rb 732bn), taxes on total income (by 11% or Rb 119bn) and property (by 6% or Rb 99bn), the regions faced a drop in collections of their key tax - corporate profit tax (by 9% or Rb 493bn). In total, due to the deterioration of the financial results of enterprises last year, the collection of this tax fell in 55 subjects. Most significantly - in regions with economies dependent on the extraction of cheaper minerals. In particular, in Komi, the decrease in such revenues amounted to 50%, in the Orenburg Region - 40%, in the Yamalo-Nenets Autonomous Okrug - 39%. In absolute terms, the budgets of the Tyumen Oblast (minus 70 billion rubles), Yamalo-Nenets Autonomous Okrug (53 billion) and Khanty-Mansi Autonomous Okrug (35 billion) lost the most.

The main source of closing the deficit were the balances of temporarily free funds on the budgets' accounts. The regions allocated for this purpose almost Rb 1 trillion out of the previously accumulated Rb 2.9 trillion, thus financing about two thirds of the deficit. Another 30% of the deficit was covered by attracting bank loans (Rb 449bn), and the remaining part - with the help of bonds and other sources.

Before that, the Ministry of Finance reported on the growth of the federal budget deficit to Rb 5.645 trillion by the end of 2025. Compared to 2024, the "hole" in the treasury became 1.6 times larger, and in relative terms - 2.6% of GDP - set a record since 2020 (3.8% of GDP). The day before, on February 25, Russian Prime Minister Mikhail Mishustin said that he, along with Russian President Vladimir Putin and Central Bank head Elvira Nabiullina, had discussed a solution to Russia's budget deficit "for many hours." Whether any solution was found and what measures were discussed, Mishustin did not specify.

In the meantime, regions have begun to cut their budgets for 2026. Thus, the authorities of Primorsky Krai at a meeting on February 25 reduced expenditures by 3 billion rubles. According to the head of the local government Vera Shcherbina, funding for educational institutions, culture, tourism and agriculture was cut. Before that, the Chelyabinsk region reduced budget expenditures by 2.2 billion rubles.

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