Russia's Financial Dilemma: A Soaring External Debt Crisis
Russia's external debt has skyrocketed to a staggering $62 billion, according to recent data, revealing a 20-year high. This surge is primarily attributed to the country's need to fund its ongoing military operations in Ukraine. As the war persists, Moscow finds itself in a financial predicament, borrowing extensively to sustain its military efforts.
On February 1st, foreign investors held a substantial $61.97 billion in Russian government debt, with the majority locked in long-term bonds. This figure is the highest since 2006 when Russia's external debt peaked at $76.5 billion. Notably, the debt has not surpassed $60 billion since 2007, making the current situation even more alarming.
But here's where it gets controversial: Russia's Central Bank estimates that the combined state and private external debt grew by 10.4% in 2025, reaching $319.8 billion. This growth is linked to new debt financing and a stronger ruble, which increased the value of dollar-denominated debts. However, some critics argue that the war's financial burden is the primary driver of this debt crisis.
The country's internal debt is also on the rise. The Finance Ministry's issuance of high-yield OFZ federal loan bonds to cover the 2025 budget deficit of 5.7 trillion rubles ($74.1 billion) has contributed significantly to this increase. Yields on 10-year Russian government bonds reflect this, standing at 14.63% on Thursday, a slight decrease from the previous days.
And this is the part most people miss: Russia's budget deficit is already feeling the strain. In January alone, it reached nearly half of its full-year 2026 target of 3.8 trillion rubles ($49.4 billion). Despite this, President Vladimir Putin has praised Russia's state debt, which stands at 17.7% of GDP, as one of the world's lowest, claiming it is unlikely to surpass 20% in the next three years.
The Moscow Times, a renowned independent media outlet, is facing severe challenges. The Russian authorities have labeled it "undesirable" and criminalized its operations, endangering its journalists. This comes after the outlet was previously labeled a "foreign agent." The authorities claim that The Moscow Times discredits the Russian leadership, while the journalists assert their commitment to unbiased reporting. The outlet is now seeking support to continue its vital work, asking for monthly contributions starting from just $2.
What are your thoughts on Russia's economic situation and the challenges faced by independent media outlets like The Moscow Times? Do you think the war's financial burden is the primary cause of Russia's debt crisis, or are there other significant factors at play?
