12 November 2025
The Russian Ministry of Finance conducted the largest-ever placement of government bonds to cover the growing budget deficit, which by early November had exceeded 4 trillion rubles.
In one day, the Ministry held three auctions, selling bonds worth 1.86 trillion rubles at par value, raising 1.75 trillion rubles for the budget. The bulk of the 1.6 trillion rubles came from two floating-rate OFZ issues (floaters), which are traditionally purchased by state-owned banks. The Ministry of Finance also sold another 152 billion rubles in classic OFZs maturing in 2033.
The government is increasing its debt as the budget’s revenue situation becomes increasingly difficult: in the first 10 months, it lost more than 20% of its commodity revenues, and in October, for the first time this year, non-oil and gas revenues fell by 4% year-on-year.
The Ministry of Finance forecasts a budget deficit of 5.7 trillion rubles by the end of the year. But in reality, it could reach 6 trillion, according to Gazprombank analysts: following US sanctions, Russian oil prices are falling, and discounts at Western ports have reached $20 per barrel for Brent.
In the first quarter, the Ministry of Finance borrowed 1.4 trillion rubles on the market, 1.46 trillion in the second, and 1.55 trillion in the third. By the end of the year, according to the ministry’s forecast, Russia’s public debt will exceed 32 trillion rubles, or 17.7% of GDP.
The government is buying up more than half of all debt securities at the largest banks, primarily state-owned ones. The Central Bank, in turn, provides these banks with the money: since the beginning of the year, it has injected 1.5 trillion rubles into the banking system through repo transactions—loans secured by government bonds.
Almost the entire budget deficit this year is financed through debt, according to Gazprombank. The government has put the National Welfare Fund, which was actively spent during the first three years of the war, on hold: its liquid assets have shrunk by 2.5 times to $50 billion, while its foreign currency reserves have fallen to a 17-year low.
Apparently, the Kremlin has decided that the reserves cannot be spent and are better saved for a rainy day, notes Andrei Yakovlev, an associate researcher at the Harvard Davis Center.
According to the draft budget law, the government does not plan to spend the National Welfare Fund in 2026 or 2027-28. The Ministry of Finance plans to plug the budget gaps by drawing on debt, which will increase by 5 trillion rubles annually, reaching 47.4 trillion rubles in 2028.