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Russia's financial crisis: Putin intervenes in citizens' savings!
Russian economy struggles with high spending, inflation and sanctions in the Ukraine conflict. Experts warn of crises.
Russia's financial crisis: Putin intervenes in citizens' savings!
Russia faces significant financial burdens in 2025 due to the ongoing Ukraine conflict. President Vladimir Putin's reserves are under severe strain while the country's oil and gas sector is recording massive losses. According to a report by fr.de There are rumors that the Russian state could take direct access to citizens' savings.
The head of financial analysis at Sberbank, Mikhail Matownikov, explained that interest on savings deposits would probably be enough to finance all unsold housing projects in Russia. Sberbank, the country's largest state-owned lender, is suffering from Western sanctions that have resulted in its exclusion from the SWIFT banking system. In addition, the inflation rate in Russia rose to 10.1 percent in February 2025, marking the fourth consecutive increase. The central bank is leaving the key interest rate at 21.0 percent, while President Putin is demanding lower interest rates.
High spending on the security and defense sector
Russia's military spending has increased dramatically in recent years, an analysis by newsukraine.rbc.ua shows. From 5.9 trillion rubles in 2021, spending on security and defense increased to 16.9 trillion rubles by 2025, accounting for 41% of the total federal budget. This development leads to a rise in inflation as additional money is pumped into the economy while production in the civilian sector declines.
Household social spending was significantly reduced. Military personnel now receive a one-time payment of 400,000 rubles and a monthly salary of at least 195,000 rubles. In case of injuries, soldiers are compensated between 100,000 and 3 million rubles depending on the severity of the injury. Despite the high spending, Russia also faces a budget deficit of 1.2 trillion rubles.
These economic challenges come in the context of strict Western sanctions. Although Russia continues to export 4-5 million barrels of oil per day, revenue from oil and gas exports has fallen sharply since the start of the war. In 2025, revenues are expected to fall 24% to $166 billion for oil and 66% to $42.5 billion for gas.