Shame on Russian savers. In June, Russia’s Finance Ministry announced its support for a bill that would transfer nearly $40 billion in private pension savings to the state treasury. Later that month, Russian Communist Party leader Gennady Zyuganov encouraged President Vladimir Putin to make the most of the nearly $1.8 trillion that Russian companies and individuals are holding in bank accounts to shore up government finances. According to Zyuganov’s calculations, “that’s three state budgets sitting there enriching bankers.”
It’s fashionable these days to ponder whether the Russian economy will collapse – but that may be the wrong question. The better question is what politically affordable sources of money the Kremlin can still use to finance military spending while maintaining social stability. It is true that many Russians became richer in the first two years of the war – wages rose, numerous jobs were created in military factories, and the recruitment bonuses for new soldiers went to the poorest regions. But this redistribution machine is now coming to a halt as the Kremlin quickly exhausts all the pots of money it can easily access.
Shame on Russian savers. In June, the Russian Finance Ministry announced its support for the draft law transfer almost $40 billion in private pension savings will flow into the state coffers. Later that month, Russian Communist Party leader Gennady Zyuganov encouraged President Vladimir Putin to do so do the best the nearly $1.8 trillion that Russian companies and individuals hold in bank accounts to support government finances. According to Zyuganov’s calculations, “that’s three state budgets sitting there enriching bankers.”
I wonder if the Russian economy will do that collapse is fashionable these days – but that may be the wrong question. The better question is what politically affordable sources of money the Kremlin can still use to finance military spending while maintaining social stability. That’s right, a lot of Russians became richer During the first two years of the war, wages rose, numerous jobs were created in military factories, and recruitment bonuses for new soldiers went to the poorest regions. But this redistribution machine is now coming to a halt as the Kremlin quickly exhausts all the pots of money it can easily access.
Private capital was the first pot of money Moscow resorted to to finance the war, starting with confiscations. A match from Cedar, a media outlet run by exiled Russian economists, shows that prosecutors filed claims to seize assets worth about $60 billion between early 2022 and late 2025. Cedar’s dates end in 2025, but seizures continue apace. In May, a court moved $7.6 billion Assets of Rusagro founder Vadim Moshkovich transferred to state ownership, the largest seizure in the current wave of nationalizations. (Moshkovich’s wife (She kept her luxury apartment and country house.) To avoid such a fate, Russia’s wealthiest resort to creative options. In March, Suleiman Kerimov, whose net worth is $11 billion, generously offered a donation $1.4 billion into the state treasury. Meanwhile, other rich Russians are busy move their assets abroad.
Most entrepreneurs are able to keep their businesses, but a larger portion of their income is deducted through taxes. In 2025 the profit tax rate is climbed to 25 percent (previously 20 percent), a move that Moscow estimates will generate $22 billion a year in additional revenue – slightly more than a month current military spending. In April there are plans for a Windfall tax The prospect of corporate profits in 2025 above the 2018-2019 average kept Russian CEOs up at night. No action followed, perhaps because the Kremlin’s hopes of a fiscal bonanza were misplaced. As chief business lobbyist Alexander Shokhin Say it“All mechanisms are in place in the tax code. Another thing is that there is no profit, many are in the red.” The data agree: Russian companies’ expenses exceeded their income by around 10 percent 150 billion dollars in 2025.
With little to be had from corporations, Moscow’s logical next step was to shift some of the rising costs of the war onto the balance sheets of state-owned companies and regions. Darkness and denial are the method. Experts who try to interpret government figures usually only read the federal budget and analyze its defense spending down to the last kopeck. Few actually look at the accounts of state-owned companies or the budgets of Russia’s 89 regions. (The Russian government believes it controls 89 federal regions, republics and territories, but six of them are illegally annexed parts of Ukraine.) Disclosure is patchy and fragmented across many entities, making it difficult to calculate the overall price of the war. But here too, Moscow’s tactics have their limits.
Start with governmental Cash cows like Gazpromwhich previously contributed around 10 percent to the Russian federal budget. In 2022, the Kremlin ordered the company to funnel the equivalent of $72 billion into government funding, forcing the company to hand over all of its 2021 profits. The company had to make an additional contribution in 2023 and 2024 50 billion rubles (currently $638 million) per month, causing the company to post its first annual loss in nearly a quarter century in 2023. The company returned to profitability in 2024, but after years of government support there is little left to milk. Gazprom’s market capitalization has shrunk to $26 billion, just a fifteenth of that $367 billion Peak in 2008.
Russian regions are another prime example of Moscow’s attempts to make the most of its rarely scrutinized balance sheets. The Federal budget 2025-27 plans cuts in the category of social spending, which could include pension, social security and maternity benefits. The step is accompanied by an appeal to the regions shoulder more of these expenses. However, it is unclear where they would find the money. Federal transfers to the regions are frozen at the nominal level of 2021; Last month, that meant an inflation-adjusted cut of about a third since the beginning of the war. On the expenditure side, the war brought new obligations to the regions. They finance Death compensation Payments that reconstruction of the occupied Ukrainian territories and the majority of bonuses for military recruits.
This Signing bonuses illustrate the budgetary problems of the regions. Five regions – Chuvashia, Mari El, Orenburg, Samara and Tatarstan – are expected to be created by October 2025.cancelled regional handouts for new recruits. The descent was steep; in Samara, volunteers receive only the federal floor of 400,000 rubles (nearly $5,000), compared to a high of 3.6 million rubles (around $45,000). As Recruitment numbers sank, all five regions hastily restored big bonuses three months later. Given Moscow’s orders to do more with less, that’s no wonder 73 out of 89 Regions recorded deficits in 2025, up from 49 in 2024. (These figures include annexed Ukrainian territories.)
In a sure sign of growing financial pressure, the Kremlin is now turning to the third and most politically sensitive pot of money: households. In January, value added tax (VAT) was increased to 22 percent (of 20 percent), a move that Moscow explicitly linked to defense and security needs. Unlike expropriations aimed at billionaires, such measures affect virtually all Russians. The Treasury Department estimates the additional revenue at around $13 billion per year, which is barely a month of military spending. The pressure on budgets goes beyond VAT: the government has expected an increase of 27.9 percent extra costs for gas, electricity and heating in the period 2026-28 – in stark contrast to the official forecast around 5 percent inflation this year.
The possible pension raid is the final stage of this strategy. One bill would allow about $40 billion to be transferred from private retirement accounts to an existing one state-managed pension fund that invests broadly half of his portfolio in government bonds. For Moscow, using pension funds to finance the war-related budget deficit is an elegant solution to a thorny problem. Despite the rise in oil prices caused by the war in Iran, the budget deficit in the first five months of this year several times exceeded the Kremlin’s target for the full year about 60 percent. Such deficits increase Russia’s borrowing needs, but investors are in no hurry to buy Russian debt. In June and July, the Treasury Department had to cancel three of its four bond auctions due to a lack of buyers. Auctions are now exposed unlimited.
Of course, a regime that claims to guarantee social stability would never admit that it has committed attacks on its own population. Last December, the Kremlin proudly announced that state pensions would rise by 19% 7.6 percent this year slightly above the official inflation rate. Officially, private pension funds, which would fall under state control, would not be fully confiscated. Moscow likes to claim that it is protecting the social contract – while at the same time shifting costs to less visible channels.
The April edition of the International Monetary Fund’s World Economic Outlook should be required reading in Moscow. Draw on Data The report dates back to 1946 and outlines the cost of wartime defense spending. Governments typically cope with increased military spending by cutting social spending and increasing borrowing, with public debt as a share of GDP increasing by an average of 14 percentage points. The catch in Russia’s case is that Moscow can’t easily borrow; Domestic investors are avoiding bond auctions and Western sanctions have cut off access to international markets. What other wartime states do primarily with bonds, the Kremlin must do with a broader mix: the few bonds it can sell, plus a combination of confiscations, taxes and financial manipulation that shift costs from the federal budget to various other balance sheets.
None of this means that the Russian economy is on the verge of collapse. The Kremlin still has ways to gain more resources – taxes can be increased, spending can be reduced, and assets can be confiscated. The challenge for Russian policymakers is that every additional ruble they raise comes with increasing political costs. This pressure is the main transmission channel for Western sanctions. Moscow won’t run out of money anytime soon, but it will certainly run out of politically affordable ways to raise it.
https://foreignpolicy.com/2026/07/27/russia-ukraine-war-money-spending-defense-budget-taxes-asset-confiscation-sanctions-finance/
