Major Corporations Seek Government Lifeline
Leading Russian corporations are intensifying their appeals to the Kremlin for direct financial support and substantial tax breaks, placing immense strain on the federal budget. For instance, lobbyists for the metals industry are pushing to eliminate steel excise duties and mineral extraction taxes on iron ore. These concessions alone could cost the state an estimated 10 billion rubles per month. Furthermore, state-owned Russian Railways and the aviation group S7 (also known as S7 Airlines) are seeking tens of billions in subsidies, highlighting the sheer scale of the demands.
Mounting Economic Pressure
The situation is exacerbated by Russia's isolation from Western capital markets and its central bank's record-high key interest rate. Plummeting oil prices and the necessity to sell raw materials at steep discounts are slashing budget revenues. The share of Russia's budget revenue from oil and gas has fallen sharply, from 40% in 2022 to just 25% by the end of 2025. Meanwhile, the liquid reserves of the National Welfare Fund are nearing a critical minimum, adding significant risks to the country's economic stability. This financial squeeze comes as Russia's economy faces the dual pressures of international sanctions and structural weaknesses.
In response, Russia's Ministry of Finance has shown a clear reluctance to grant major tax concessions. Instead, it is offering companies only superficial measures, such as payment restructuring or indirect aid. Faced with this financial uncertainty, businesses are preparing for painful contingency plans, which may include:
- selling off assets
- implementing radical cost-cutting measures
- changes in ownership
These preparations signal the severe challenges confronting the Russian economy under the weight of global sanctions and internal crises.
The current market conditions reveal a profound economic crisis, stemming from both external sanctions and deep-seated domestic financial issues. The loss of access to Western capital and declining hydrocarbon revenues underscore an urgent need for reform and state intervention. However, the government's current unwillingness to enact drastic changes risks further economic deterioration and could heighten social tensions within the country.