Russia’s state debt has increased by almost 10% in the first half of the year, as the government sought funds to support the economy. According to a report by Russia’s Accounts Chamber, government borrowing between January and June surged by 9.8% and is expected to reach 25.1 trillion rubles ($256 billion) by the end of the year, accounting for 16.7% of Russia’s GDP.
During the first six months, domestic debt rose by $14 billion, or 7.4%, bringing the total to $206 billion. The Finance Ministry has set an upper limit of $211 billion for domestic debt in 2023, indicating that Russia is approaching that threshold. However, the report also noted that the share of internal borrowing in the total debt structure decreased from 82.3% to 80.5%. The amount of domestic debt in securities has risen by $14 billion since the beginning of the year, reaching $198.9 billion as of July.
On the other hand, Russia’s external debt decreased by $1.2 billion to $56.2 billion, out of a higher limit of $66.6 billion. This reduction is largely due to Russia’s decision to reduce the volume of borrowing under government guarantees in US dollars by $1.1 billion to $18.5 billion. The country’s ability to borrow abroad has been hindered by Western sanctions related to the situation in Ukraine.
The government’s increasing reliance on internal borrowing is a consequence of the limitations on foreign borrowing. In 2022, Russia saw a significant rise in domestic debt to $194 billion, while its external debt dropped to around $41 billion.
Looking ahead, according to the law on the federal budget for 2023-2025, it is expected that Russia’s state debt will continue to grow. By the end of 2023, it is projected to reach around $259 billion, followed by $282.6 billion in 2024, and $305 billion by the end of 2025. The government aims to keep the volume of Russia’s state debt below 20% of GDP during this three-year period.
The increasing state debt reflects the challenges Russia has faced due to Western sanctions and its need to support the economy. These sanctions have limited Russia’s access to international borrowing and forced the government to rely more on domestic borrowing to meet its financing needs.
In conclusion, Russia’s state debt has risen by almost 10% in the first half of the year, reaching 25.1 trillion rubles ($256 billion) by the end of 2023. The government has been borrowing more funds internally due to limitations on foreign borrowing caused by Western sanctions. Despite the increase in state debt, the government aims to keep the volume below 20% of GDP in the next three years. These measures reflect Russia’s efforts to navigate economic challenges and support its economy amid external pressures.
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