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The war in Ukraine is draining Russia’s funds and stocks, putting it on the brink of economic collapse.
Vladimir Putin acknowledged that the sanctions imposed on Russia since the start of the war in Ukraine have created significant economic challenges.
The head of state made this admission following the decision of the Russian central bank to raise interest rates to 21%, a record since the start of hostilities in Ukraine back in February 2022.
Russia continues to increase its military spending: in 2025, it will reach $140 billion, or 6.2% of GDP or 40% of the budget. Since 2023, it has increased by 70% and since 2021 by 300%. On the other hand, all social spending will be reduced by 10%.
Despite the war economy, the Russian army in Ukraine may run out of funds. In September, Kyrylo Budanov, the head of Ukrainian defense intelligence, told a conference in Kiev that Russia will try to force an end to the war in 2025, when the Kremlin could start facing real economic problems.
