4 September 2026
Russian authorities have activated monetary emission by the Central Bank to fill the federal budget, which spends every third ruble on the war and ended January–July with a deficit of 6.5 trillion rubles.
On Wednesday, September 2, the Russian Ministry of Finance returned to issuing government bonds after a six-week hiatus, selling 1 trillion rubles worth of securities in a single day. By comparison, over the previous two months, it managed to borrow only 10 billion rubles for the budget, and 1.5 trillion in April–June. This year’s record-breaking placement covered two-thirds of the quarterly borrowing plan: the budget received 939 billion rubles.
However, on the same day, and virtually the same amount, the Central Bank of the Russian Federation provided banks with loans, noted Sergei Aleksashenko, former Deputy Finance Minister and Deputy Chairman of the Central Bank. According to the regulator’s own statistics , it injected 953 billion rubles into the banking system through repo transactions. In other words, all of the credit institutions’ expenses for purchasing federal loan bonds (OFZs) were immediately offset by Central Bank funds. “A coincidence? I don’t think so,” Aleksashenko quipped.
Economist Vladislav Inozemtsev attributes the Finance Ministry’s large-scale borrowing to hidden issuance. Banks obtain loans from the Central Bank using OFZs, which they purchase from the Finance Ministry, as collateral. As a result, the government securities remain on the Central Bank’s balance sheet, and the volume of such transactions is growing. According to its own statistics, the regulator has provided banks with 1.695 trillion rubles in repo loans since the beginning of the year, bringing their total volume to 5.334 trillion rubles.
The Bank of Russia is lending money to the Ministry of Finance, using the balance sheets of state-owned banks as cover—it did the same in December 2024 and November 2025, Aleksashenko recalls. Then, amid a deteriorating budget situation, the Ministry of Finance borrowed 2 trillion rubles and 1.7 trillion rubles, respectively, each time using floaters—securities with a floating rate.
Without assistance from the Central Bank, credit institutions are finding it increasingly difficult to finance their budget deficits. Amid the outflow of funds into cash, the banking system’s liquidity deficit is growing, according to Raiffeisenbank analysts: by early September, it had reached 2.6 trillion rubles.
When preparing the current year’s budget, the Ministry of Finance expected to reduce the deficit from 5.7 trillion rubles last year to 3.7 trillion. However, by the end of the first quarter, the treasury deficit had already exceeded the annual plan, and by the end of the year, according to internal government estimates, it could reach 9 trillion, sources familiar with the situation told Bloomberg. To bring the deficit under control, they said, the government has cut spending across all civilian budgets by a third since April and instructed state agencies to prepare for layoffs of 15% of their staff.
War expenses remain a headache for the budget: they could exceed the budgeted amount by 4-5 trillion rubles. To finance the Defense Ministry’s appetite, the Finance Ministry, in addition to sequestration, intends to raise 2-3 trillion rubles in additional debt, Bloomberg sources said.
One of the best ways to cause hyperinflation and to make money worth less or even worthless is to print more of it, especially without a matching increase in goods and services, which is the case in mafia land.
Ah!!! The sweet smell of hyperinflation and economic disaster.