Russian economy meltdown as pensioners hammered by inflation | World | News
The Russian government is preparing to increase taxes and reduce expenditures to maintain high defense expenditures. The country’s economy shows important strains while struggling to finance the war in Ukraine, which has been dragged for more than three years.
Falling oil and gas prices worse the budget deficit that threatens to leave the control that some of them have caused a warning about a close stagnation as the economy cools down. The lack of government finances rose by 4.9 trillion rubles (roughly 45.2 billion), and claimed that Russia would fight to fulfill its current obligations and finance the war at the current speed. Budget expenditures, Russia’s full -scale Ukrainian invasion in February 2022, almost doubled with nominal terms.
Great cash injection fueled economic growth, but helped to increase inflation and forced the central bank to increase the rates up to 21%. This made it much more expensive for companies to secure loans and loans from financial institutions.
This year, both defense and national security expenditures for 17 trillion rubles (£ 156 billion). It represents the highest level since the Cold War, constitutes 41% of total expenditures and makes the Russian economy more dependent on the defense sector for growth.
Although the authorities say that Vladimir Putin expects a decrease in military expenditures, the next year, the new budget expects more funds to the defense.
“Even with the ceasefire, shells and drones will still have to be done, but on a slightly smaller scale,” he said. Reuters. “There will be no return to the existing level from the ‘private military operation’,” he added.
According to Anatoly Artamonov, President of the Parliamentary Budget Committee, an option to collect more funds is to reduce two trillion rubles every year to 2028 each year and direct these savings to the defense budget.
Since the money is directed to the army, the Russians may expect a decline in public services. Sergei Aleksashenko, former Deputy Governor of the Central Bank of Russia, said that 2025 was the first year when total education and health expenditures at the federal and regional levels decreased as a significant decrease in GDP.
Authority added that the Kremlin expects to accumulate money by indexing to spending on things like retirement below the inflation rate, which is estimated to be between 6-7% this year.
The economic appearance seems to be more gloomy and experts envision a long -range growth period.
“The Russian economy is struggling under high interest rates and ongoing war efforts. The long -term weak growth period lies in the warehouse.”
