The financial stability of Russian regions has sharply deteriorated. In 2025, the total deficit of regional budgets reached $19.2 billion—3.6 times higher than the previous year ($5.3 billion). The number of regions with a deficit increased from 50 to 74 out of 89.
The largest absolute gaps were recorded in Moscow ($3 billion), the Yamalo-Nenets Autonomous Okrug ($1.1 billion), and the Khanty-Mansi Autonomous Okrug ($0.9 billion). In relative terms, the worst-affected regions are Kemerovo, Vologda, and Arkhangelsk, where deficits reach 34–35%.
The main driver of the gap is a 9% increase in expenditures, reaching $313 billion. At the same time, corporate income tax revenues fell by 9% ($6.4 billion) across 55 regions. Resource-rich regions were hit the hardest: the Komi Republic – down 50%, Orenburg Oblast – down 40%, Yamalo-Nenets Autonomous Okrug – down 39%. This is a direct signal of the degradation of major industrial companies, former donors to the federal budget.
To cover the shortfalls, regions spent almost $13 billion of the $37.7 billion in accumulated reserves. Another 30% of the deficit—$5.8 billion—was covered through bank loans. Regional government debt reached 3.5 trillion rubles, the highest level in 15 years. Bank borrowing tripled, from 227 billion rubles in 2024 to 676 billion in 2025. At the beginning of 2026, 37 regions had commercial loans; 17 of them took out loans for the first time simply to cover operational needs.
Meanwhile, Moscow is systematically restricting regional access to preferential financing, forcing them to borrow from commercial banks at market rates. The cost of servicing regional debt has already risen by 38.8%, reaching 23.9 billion rubles. The beneficiaries of this scheme are banks linked to oligarchic groups and Putin’s inner circle.
An additional burden comes from war-related expenses against Ukraine, including “bonus” payments to contract soldiers. Combined with sanctions, falling energy prices, and an artificially high central bank rate, this is further undermining the investment potential of the regions. Using reserves is only a temporary measure: once their safety cushion is depleted, regions will become fully dependent on federal subsidies. Analysts estimate that the situation will worsen further in 2026.
