Siluanov described the state of regional finances as
“difficult.”
“Last year, the deficit rose significantly, from the usual
200 billion to 300 billion rubles for consolidated regional budget deficits to
1.5 trillion,” he said.
In 2026, Siluanov estimates the combined budget gap in
Russia’s regions will grow by another 400 billion rubles, reaching 1.9
trillion. He said regional authorities must tighten their budgets to bring the
deficit down to 1 trillion rubles.
Siluanov said the largest deficits last year appeared in
regions that had previously been “donors” — regions that usually pay more into
the federal system than they get back. He attributed the shortfalls to falling
profit tax collections. Overall, regional budgets lost 480 billion rubles in
profit tax revenue, down 8.3% from 2024.
Profit tax collections fell by half in the Komi Republic, by
40% in Orenburg Oblast and by 38% in the Yamalo-Nenets Autonomous Okrug. Tyumen
Oblast, Ingushetia, Karelia, Arkhangelsk Oblast and Kemerovo Oblast each lost
more than 30% of such revenue. Analysts at Expert RA said the decline reflected
an economic slowdown and falling export income.
By the end of the year, industrial output and construction
volumes had fallen in half of Russia’s regions, while one in three regions
recorded a decline in agriculture. The number of regions with shrinking
investment doubled, from 23 to 46, while consumer demand slowed almost across
the board, in 80 regions.
To cover the shortfalls, regional authorities spent about 1
trillion rubles from accumulated bank reserves and increased their debt to 3.5
trillion rubles, the highest level in 15 years.
“An increase in profit tax revenue for regional budgets in
2026 should most likely not be expected,” the agency’s analysts wrote. They
said corporate financial results, which determine tax revenue, would remain
under pressure from “the still-high cost of borrowed capital, logistics costs
and labor shortages.”
At the same time, Expert RA said regional spending will
remain high. Beyond social spending, regions must finance military recruitment,
which “eats up” about 1 trillion rubles a year.
The pressure extends beyond regional budgets. Earlier
reports said Russia’s oil and gas revenues in 2025 fell to their lowest level
since the coronavirus pandemic.
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, the
Russian government has acknowledged.
Ukrainian intelligence said the financial condition of
medium-sized and large Russian companies continued to deteriorate, pointing to
growing imbalances in the corporate sector.
More than half of large companies in Russia ended 2025 with
falling profits, cut or completely froze investment projects, and many are
preparing layoffs.
On Feb. 24, 2026, reports said about 300 companies in Russia
were preparing to close.
For the first time, 74 Russian regions were simultaneously
running budget deficits.
Russia has also seen a wave of mass business closures.
Russia’s Finance Ministry acknowledged that the country’s
budget gap is widening at a record pace.
Rosstat acknowledged that more than 17,000 Russian
businesses reported losses.
VkusVill became the first major Russian grocery retailer to
begin shrinking its store network, closing 286 stores by the end of 2025.
Magnit, Russia’s largest retail chain by number of stores,
ended 2025 with a net loss.
On April 3, 2026, reports said 22 Russian industries had
slid sharply into the red.
Russian clothing retailer Zolla closed 35 stores amid a
sharp drop in profit.