Russia faced a challenge for its war effort in 2025: the country is temporarily short of money, monetary reserves are depleted before the end of the year, estimates a European economist.
Anders Åslund, a Swedish economist who is a former member of the Atlantic Council, said the National Heritage Fund’s liquid reserves for Russia may be depleted during this year’s slump.
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 past 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 noted.
Still, for its 2025 budget, Russia is on track to spend a record $130. 5 billion on defense this year.
“However, the maximum critical shortage is the investment of the budget, because Russia’s new liquid reserves deserve to be depleted in the autumn of 2025,” Åslund wrote in an editorial for Project Syndicate that was published on Tuesday. “Budget discounts will be necessary. Meanwhile, the war economy may also require costs and rationing – former Soviet sins. While the threat of a monetary twist of fate increases, Russia’s imperiled economy is poised to pose serious restrictions on the serious restrictions in the Putin War.
The immediate fall in the background of Russian wealth in part motivated through Western sanctions, which prevented Russia from requested loan from other countries. The foreign debt of the country collapsed in the last decade, with a foreign loan of $ 729 billion in 2023 in around 293 billion dollars in September 2024, Åslund said.
Russia’s limited ability to finance the war also spells bad news for the health of its economy, which is plagued by a myriad of other issues.
Åslund pointed to soaring inflation, the declining value of Russia’s currency, and a severe shortage of workers in the nation, all factors that economists have warned could crimp Russia’s long-run growth prospects.
“Russian President Vladimir Putin frequently boasts about the strength of his country’s economy, claiming that Western sanctions only made it stronger (while in the same breath demanding that they be lifted). In fact, ‘stagflation’ — inflation combined with minimal growth — is coming to Russia,” Åslund said.
Other mavens have also issued dark forecasts for the Russian economy, and some point out that economic weakness can interfere with Russia’s ability to continue his war. Renaud Foucart, another European economist, said last year that Moscow did not seem to be to win or lose the war.
The Atlantic Council recently said that Russia’s economic disorders can end its clash with Ukraine in 2025.
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