Two-thirds of Russian regions face budget deficits as economic strain spreads

That means two-thirds of Russia’s regions are now short of funds. In the first quarter of 2022, when the Russian army invaded Ukraine, deficits were recorded in only six regions, according to a preliminary report by Russia’s Accounts Chamber cited by The Moscow Times.

The number of regions with high deficits — above 10% of tax and non-tax revenue — also rose, reaching 35 compared with 23 a year earlier. The highest budget deficits relative to revenue were recorded in the Jewish Autonomous Oblast at 50.5%, Kemerovo Oblast at 50%, Vologda Oblast at 32.9% and the Komi Republic at 32.7%. In absolute terms, the largest budget gaps were in Kemerovo Oblast at 21.3 billion rubles ($295 million), Khanty-Mansi Autonomous Okrug at 20.3 billion rubles ($281 million), Krasnodar Krai at 19.9 billion rubles ($275 million), Irkutsk Oblast at 17.4 billion rubles ($241 million) and Moscow Oblast at 15.2 billion rubles ($210 million).

At the same time, 34 regions ended the first quarter of 2026 with surpluses, down from 44 a year earlier. Their total surplus stood at 434 billion rubles ($6 billion), compared with 489 billion rubles ($6.8 billion) a year earlier. In 23 regions, the surplus did not exceed 5 billion rubles ($69 million), while in 10 regions it ranged from 5 billion rubles ($69 million) to 33 billion rubles ($456 million). Moscow’s surplus reached 276.9 billion rubles ($3.8 billion).

Russia’s cooling economy is weighing on regional budgets, the report said. The rise in deficit-running regions was driven primarily by an 11.7% year-over-year drop in corporate profit tax revenue, to 184 billion rubles ($2.5 billion), said Tatiana Tirskikh, managing director for regional and sovereign ratings at Expert RA. At the same time, Accounts Chamber data showed regional spending rose 4.3% in the first quarter, to 5.37 trillion rubles ($74.3 billion). The increase was linked to wage indexation for public-sector workers, expanded social support for some groups and national projects.

If current conditions hold, more than 70% of regions could end 2026 with deficits, said Emil Ablayev, an expert at the Center for Macroeconomic Analysis and Short-Term Forecasting. Sergey Klisenko, managing director of the NRA rating service, estimated that the regions’ total deficit could reach 4 trillion to 4.5 trillion rubles ($55.3 billion to $62.2 billion) by the end of the year. Russia’s Finance Ministry said it continuously monitors regional budget execution and takes the necessary steps to keep budgets balanced.

Earlier reports said Russia’s federal budget could face a significant deficit as early as the start of 2026 because of a shortfall in oil and gas revenue, which the Russian government has acknowledged.

Ukrainian intelligence said the financial condition of medium-sized and large Russian businesses continued to worsen, showing growing imbalances in the corporate sector.

More than half of large companies in Russia ended 2025 with lower profits, reduced or fully froze investment projects, and many were preparing layoffs.

On Feb. 24, 2026, reports emerged that about 300 companies in Russia were preparing to shut down.

For the first time in history, 74 Russian regions were simultaneously in the red.

A wave of mass business closures began in Russia.

Russia’s Finance Ministry acknowledged that the budget gap is growing at a record pace.

Rosstat acknowledged that more than 17,000 Russian businesses reported losses.

VkusVill became the first major grocery retailer in Russia to begin shrinking its retail network: By the end of 2025, the company had closed 286 stores.

Magnit — Russia’s largest retail chain by number of stores — ended 2025 with a net loss.

On April 3, 2026, reports emerged that 22 Russian industries had fallen sharply into the red.

Russian clothing retailer Zolla closed 35 stores amid a steep drop in profit.

One in two small businesses in Russia was left without a profit.

In April 2026, Russia officially recorded a GDP collapse for the first time in years.

In May 2026, the Kremlin officially acknowledged a nearly threefold GDP slump.

On June 9, 2026, reports emerged that the Federal Tax Service had instructed regional authorities to consider raising taxes to cover local budget deficits, which hit a historic record of 1.5 trillion rubles ($20.7 billion) in 2025.