The Russian economy is in a critical situation. At least, that is what can be intuited if some official data are seen regarding the current liquidity of the country with respect to what they had just over three years ago, when the invasion of Ukraine began. So, of the 110,000 million euros with which the Russian regime counted in 2022, At the end of this year there were only about 30 billion left, which represents a reduction of 80 billion euros.
This has been interpreted as a clear and serious symptom of weakness and alarm, which seems that sooner rather than later will force Russia to prioritize its position: maintain its war economyclearly diminished by the sanctions and waste of war or on the contrary, try to look for alternatives that ensure the future of the nation before That the situation is totally limit and the country will lead to bankruptcy.
At the moment, Moscow tries not to show being concerned about this matter, at least for the outside, although the official data are true, The issue should be a great headache to Vladimir Putin. The aforementioned funds are nothing less than the calls as national well -being funds of the country, which have been used to try to heal and minimize economic damage derived from war.
However, some estimates begin to glimpse that by the end of this year, that budget could end and The effects of war could begin to manifest directly in the welfare of the population.
According to the budgetary framework that was approved this week, it is likely that The state deficit reaches 40,000 million of eurosa figure larger than the balance available to cover this issue. Thus, in the words of Heli Simola, senior economist of the Bank of Finland, “It seems that the background resources are not enough to cover the deficit, So Russia will have to look for other ways. “
And for this, the Russian State has three options, according to Simola:
1. That the State assumes more debt: This would imply that Russia gets loans from Russian banks, since at the moment they could deal with this request. This can happen, since, according to the economist, Russia only has 20% of debt of your GDP, which allows you to be able to borrow a little more.
2. Increase taxes or cut expenses: The second option would increase taxes, one of the most common practices in many countries in extreme need, lack of liquidity or a galloping debt. Obviously, The negative part is that with this decision, it would be the Russian citizens themselves those who would see their quality of life worsen and those who would directly be voting – and suffering – the cost of war.
3. The Russian Central Bank Financial the State: Thus, the country’s maximum monetary institution could issue more rubles to finance public spending, although this measure could cause Accelerated inflation – Raise 10% – that would weaken more if possible to the currency.
For all this, the option that seems to win more integers would be to resort to the Central Bank to be this who finances the war, the time arrived, Although this decision does not fall especially well among the main magnatesbanking entities of the country and managers of large companies.
These have been criticizing the policies of raising interest rates, since they consider it a slab so that the business fabric ofThe country invests in a determined way, and so the country can grow economically.
