Survival without support and without prospects: intelligence stated that Russian regions are gripped by a financial crisis
Kyiv • UNN
Russian regions are experiencing an increasingly deep sense of hopelessness, as sanctions and the loss of external markets have exposed the structural weakness of their budgets. The worst situation is observed in depressed regions, as well as in industrial and metallurgical regions, where significant budget deficits are predicted.
Russian regions are entering the new year with an increasingly deep sense of hopelessness, and the financial burden is rapidly concentrating where the economy's foundation was recently formed. The combination of sanctions, loss of external markets, and worsening global conditions has exposed the structural weakness of regional budgets, which are no longer able to meet even basic obligations. This was stated by the Foreign Intelligence Service, as reported by UNN.
Details
According to intelligence data, the worst situation is in traditionally depressed regions – Kalmykia, Mari El, and Pskov Oblast. Their survival model has been built on federal transfers for decades, but now these flows are shrinking, and access to credit is rapidly narrowing. Chronic debt, lack of investor interest, and reduced subsidies are creating the preconditions for a full-blown budget crisis with no visible way out.
Against this background, the problems of industrial regions only reinforce the overall picture. Coal-mining territories, particularly Kemerovo Oblast, will become some of the main "minuses" for the Russian budget this year. The fall in world coal prices, sanctions pressure, and the final loss of the European market are leading to a projected 4.1% reduction in gross regional product (GRP) and a budget deficit of about 44 billion rubles. Khakassia finds itself in a similar trap: unprofitable mines are combined with dependence on non-ferrous metal prices and limited hydropower capabilities, where the state-owned "RusHydro" is squeezed between tariff regulation and the lobbying of metallurgists.
Intelligence notes that metallurgical regions are also losing their footing. In Irkutsk Oblast, the fall in aluminum and coal prices is forming a projected budget deficit of 40 billion rubles, and the protracted crisis at Rusal enterprises leaves no room for optimism for local authorities. In Vologda Oblast, the situation is further exacerbated by the conflict between Governor Georgy Filimonov and Severstal owner Alexey Mordashov – so much so that economists have effectively abandoned updating GRP forecasts from 2024.
Regions with "specific risks" are becoming a separate pressure on the federal budget. Astrakhan Oblast expects a 2.1% drop in GRP with the prospect of negative dynamics continuing until 2028 due to the depletion of oil and gas fields and a lack of resources to launch new ones. Kursk and Belgorod Oblasts, which previously benefited from cross-border trade with Ukraine, have become frontline territories, completely dependent on subsidies. The general logic for the regions is becoming increasingly harsh: they can no longer rely on the center. The federal budget, limited in resources, is focused on the war against Ukraine. Domestic demand is not growing, and the population and investors do not have more money. For Russian regions, this means one thing – survival without support and without prospects.