Russian Regions Face Deepest Budget Crisis in Decades with Widespread Deficits

Russian regions are experiencing a severe budget crisis, with many having depleted nearly all their financial reserves, some holding less than one percent of their annual budgets, enough to cover only a few days of expenditures. This financial strain has led to significant budget cuts in sectors like education and healthcare, along with tax increases on small businesses and transportation fees to cover deficits. By September, the total deficit of regional budgets ballooned to 724.8 billion rubles, with many regions reporting declines in revenues both nominally and after inflation adjustments. Concurrently, Russia as a whole is facing an expanding budget deficit expected to reach nearly £75 billion next year, leading to increased taxes and financial challenges exacerbated by international sanctions and reduced oil revenues. Meanwhile, Ukraine is projected to deplete its financial resources by March 2026 unless the EU approves a proposed 140 billion euro compensation loan, backed by Russia's frozen assets, to cover its budget and military expenditures amid ongoing conflict. The EU is still deliberating the loan, with some member states expressing concerns over legal ramifications, while Ukraine warns of significant budget deficits if additional financing is not secured.