"Years after Putin ordered the full-scale invasion of Ukraine, Russia's financial system is showing signs of vulnerability. Three and a half years of war against Ukraine have weakened Russia's cash reserves, indicators show, possibly signalling that its economic resilience is beginning to fray. Russia experts have told Al Jazeera that the country of 143 million people is now almost wholly dependent on export revenue from oil and gas for its cashflow, and a major round of new sanctions could bring it to the negotiating table."
"On October 14, United States President Donald Trump predicted that the Russian economy is going to collapse. Kremlin spokesman Dmitry Peskov responded the following day that the country's financial system has a sufficient and considerable margin of safety to allow the country's leadership and all of us to implement the plans that we set for ourselves. But Peskov was perhaps too optimistic."
"Last month, the Russian Ministry of Finance said it had run a $51bn budget deficit in the first eight months of the year, surpassing a deficit provision of $47bn for the entire year. Ministry documents seen by the Reuters news agency have suggested it was planning to cut its 2026 defence budget by $11bn to $154bn, a 7 percent drop."
Russia's cash reserves and financial system show growing vulnerability after three and a half years of war in Ukraine. The economy is now heavily dependent on oil and gas export revenue for cashflow. The finance ministry reported a $51 billion budget deficit in the first eight months of the year, exceeding the annual provision. Documents indicate a planned cut to the 2026 defence budget by $11 billion to $154 billion, a 7 percent reduction, while actual defence financing may fall closer to 15 percent due to a sharp drop in bank lending. War funding for 2025 is on track to contract by 15 percent, and military territorial gains have remained below 1 percent.
Read at www.aljazeera.com
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