Russia is on pace to run out of financial reserves by this fall, which would cripple war efforts, economist says

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Posted on 01/14/2025 5:23:38 PM PST by Apparatchik

Russia is facing a critical challenge to its war effort in 2025: The nation is quickly running out of cash, with financial reserves potentially running out before the end of the year, according to estimates from one European economist.

Anders Åslund, a Swedish economist and a former fellow at the Atlantic Council, thinks liquid reserves in Russia's National Wealth Fund could potentially be depleted by the fall of this year.

That spells trouble for the nation's military efforts in 2025, he said, given how heavily Russia has relied on its wealth fund over the last several years.

Liquid reserves in the wealth fund have been drawn down from $117 billion in 2021 to $31 billion as of the end of November, Åslund said.

Yet, according to its 2025 budget, Russia is on track to spend a record $130.5 billion on defense this year.

"The most critical shortage, however, is budget financing, as Russia's last liquid reserves are likely to run out in the fall of 2025," Åslund wrote in an op-ed for Project Syndicate on Tuesday. "Budget cuts will then become necessary. In the meantime, the war economy might also require price controls and rationing — the old Soviet sins. As the risk of a financial crash rises, Russia's imperiled economy is about to pose serious constraints on Putin's war."

The rapid decline in Russia's wealth fund has been partly driven by Western sanctions, which have prevented Russia from borrowing from other countries. The nation's total foreign debt has collapsed over the last decade, with foreign borrowing down from $729 billion in 2023 to around $293 billion in September 2024, Åslund noted.

Russia's limited ability to finance the war is also spells bad news for the health of its economy, which is plagued by a myriad of other issues.

(Excerpt) Read more at msn.com ...

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1 posted on 01/14/2025 5:23:38 PM PST by Apparatchik

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