Russian regions plan record budget deficit of 1.9 trillion roubles
The Finance Minister has urged regional authorities to cut spending—even though budgets have already been tightened.
Russia’s regions are facing a record combined budget deficit of nearly 2 trillion roubles. This figure is 400 billion roubles higher than last year, Finance Minister Anton Siluanov said at a meeting of the Council of Legislators under the Federal Assembly.
According to Siluanov, the “normal” annual deficit for regional budgets used to be around 200–300 billion roubles. In 2025, however, the planned deficit surged to a record 1.5 trillion roubles, while the number of regions running deficits rose from 49 to 73. The situation is expected to deteriorate further in 2026.
The largest shortfalls have appeared in traditionally donor regions, mainly due to a decline in corporate profit tax revenues, the minister noted. To plug the gap, authorities intend to reduce reliance on costly commercial borrowing and introduce stricter spending controls.
“Regions must adopt financial recovery programmes,” Siluanov said, referring to further spending cuts. At the same time, he acknowledged the need to increase expenditure on social programmes.
The primary cause of these problems is falling tax revenues. According to Anatoly Artamonov, chairman of the Federation Council’s Budget Committee, this is directly linked to the war in Ukraine. A substantial portion of funds freed up by writing off regional budget loans—originally intended for infrastructure development—has instead been diverted to finance the war effort.
“[Putin] announced in his address that these funds would be used to generate additional resources for developing engineering and transport infrastructure, and to support future investment projects, thereby expanding the tax base.
But circumstances changed. We ended up having to spend 68 per cent of these funds on the objectives of the special military operation. The rest—well, whatever remained was used as it could be,” Artamonov said.
