As of early March 2026, federal budget subsidies from Russia to its regions increased by 23.8% compared to the same period in 2025. The figures indicate a systemic transfer of resources from productive regions to politically sensitive republics, where the real contribution to the national economy is close to zero.
Irkutsk Oblast, which is among Russia’s top 10 exporters and is responsible for large-scale extraction of natural resources and electricity generation, ended the first quarter with a budget deficit of -45.6%. Nizhny Novgorod Oblast, accounting for about 1.7% of Russia’s total regional gross product and ranking among the top 15 federal subjects by GRP, recorded a deficit of -39.1%. Kemerovo Oblast, which provides nearly 50% of Russia’s coal production and 1.5–2% of its GRP, showed a deficit of -35.7%. Tyumen Oblast, the second-largest regional donor to the federal budget in 2022 with a 9.1% share of GRP, reported a deficit of -34.2%.
At the same time, Ingushetia, whose share in Russia’s GRP does not exceed 0.1%, entered the spring with a surplus of 223.2%. Dagestan, with a contribution to industrial output of only 0.1–0.3%, posted a surplus of 206.5%. Chechnya, where oil production accounts for just 0.002% of Russia’s total output, recorded 180.7%. Karachay-Cherkessia, one of the smallest regions in terms of GRP, showed a surplus of 123.5%.
The mechanism is clear: Moscow is extracting resources from its economic “engine” regions and redirecting them toward financing its strategic priorities, including the war against Ukraine. At the same time, through the subsidy system, it effectively “buys off” the North Caucasus republics, whose elites have for decades maintained pressure on the federal center through the threat of separatism, terrorism, and armed extremism. As a result, subsidies are allocated even before these republics formally request them.
The second dimension of the scheme is purely corrupt. Excess funding for the Caucasus republics is not only a geopolitical payoff but also an infrastructure for kickbacks: local authorities systematically embezzle subsidy funds and share them with Kremlin officials who “oversee” the system.
The National Wealth Fund helps cover the growing deficit: as of March 2026, its volume decreased by 134.96 billion rubles. The main expenditure item is covering the state budget deficit. Meanwhile, industrial regions are left alone with their steadily growing debt obligations.
