Russia’s national debt rises by 21% as 73 regions report budget deficits

Russia’s national debt rose by a staggering 21% in 2025, jumping by over €65 billion to reach almost €375 billion, according to an interim report prepared by the Accounts Chamber of Russia that was seen by Russian business daily Vedomosti.

While the country’s foreign debt fell 15.4% to €48 billion over the year amid ever-tightening international financial sanctions on Moscow, domestic borrowing rose by 29.1% to reach €327 billion as the Kremlin continued to pour unprecedented sums of money into prosecuting its war in Ukraine.

The cost of servicing Russia’s national debt also grew from 5.8% of the federal budget in 2024 to 7.5% of the federal budget last year, business news broadcaster RBC reported. Regional public debt grew by €.3.5 billion to reach just over €37 billion, a 10% rise since the start of 2025, with the largest increase in bank loan debt.

A budget deficit was recorded in 73 of the 88 regions Russia claims as its own territory, which include four unrecognised regions of Ukraine, the republic of Crimea and Sevastopol. In 2024, just 41 regions reported a deficit, while another 17 recorded a budget surplus. The number of regions now in the red reflects the fiscal burden they have been forced to bear in paying out signing bonuses for those who enlist to fight with the Russian military in Ukraine.

At the start of February, Russia’s external public debt stood at €53 billion, the highest level since 2006. Russia’s GDP growth is not expected to exceed 1% this year as international sanctions, untenable levels of defence spending, the continued decline in foreign investment and the knock-on effects of Ukrainian drone strikes on Russia’s energy infrastructure are increasingly making themselves felt.