Olga Solovyeva
Russian authorities are stepping up support for the regions. At a government meeting on Thursday, the cabinet approved a further RUB 19 billion in debt write-offs for six regions. More than RUB 1 trillion of regional debt is set to be written off this year, according to the finance ministry. Despite these measures, the combined regional budget deficit could approach RUB 2 trillion by year-end. Mounting sectoral strains are adding to the pressure on local finances.
‘The government will continue to support regional economic development and foster a more attractive investment climate. This applies to regions up-grading utilities infrastructure, resettling residents from unsafe housing, expanding industrial support and taking part in national projects, including those focused on technological leadership,’ Prime Minister Mikhail Mishustin said at a government meeting on Thursday
One of the key support measures is a scheme to write off two-thirds of regions’ debt on budget loans. ‘Last year, around 60 regions took advantage of this option, cutting their debt burden by roughly RUB 230 billion. This year, nearly 50 regions have already benefited, with write-offs exceeding RUB 155 billion,’ the prime minister said.
A further RUB 19 billion will now be written off under the scheme for six regions: Arkhangelsk, Kaluga, Lipetsk, Orenburg, Smolensk and Tula.
Officials say the savings will free up substantial resources in regional budgets, supporting economic development and improving living standards.
The government says it will continue to take similar decisions as requests come in from regional authorities. However, support will be conditional on local administrations directing the resulting savings towards further improving living and working conditions on the ground.
In late April, President Vladimir Putin backed a proposal to restructure regional budget loan debt by extending repayment deadlines. In particular, payments due in 2026 would be deferred to a later date, freeing up around RUB 100 billion to be channelled into social support. At the same time, he reiterated an earlier decision to write off two-thirds of regional budget loan debt, on condition that the savings are directed towards investment and other significant goals.
‘We are talking about more than RUB 1 trillion through to 2030. Two-thirds of budget loan debt is being written off, while the remaining portion will be repaid by regions smoothly and on time,’ Putin said.
Following the president’s proposal, the finance ministry submitted draft legislation to the government that would defer repayment of part of regional budget loan debt from 2026 to 2030. This applies to the one-third of debt not eligible for write-off, which regions had been due to repay this year, officials said. Extending the repayment deadlines will allow regions to reallocate budget resources towards priority areas, the ministry added.
Regional public debt currently stands at around RUB 3.5 trillion, with nearly a third set to be written off, Anton Siluanov said in late April at a meeting of the presidium of the Council of Legislators under the Federal Assembly.
By the end of 2025, the combined public debt of Russia’s regions had exceeded RUB 3.48 trillion, rising 10.6% over the year, according to the finance ministry. In absolute terms, debt increased by RUB 333.5 billion. Debt levels declined in 51 regions and rose in 38. The debt burden on regional budgets edged up by 1.1 percentage points to 18.9%. Budget loans account for the bulk of liabilities, at more than 67% (see Nezavisimaya Gazeta (NG) dated May 4, 2026). Regional budget deficits have widened from a typical RUB 200–300 billion to around RUB 1.5 trillion, Siluanov said. The overall deficit is expected to reach RUB 1.9 trillion in 2026, according to the finance minister.
According to estimates by Expert RA, more than 70 regions ended last year with budget deficits. In 2026, regional finances are expected to remain highly sensitive to monetary conditions and external trade dynamics. ‘The most vulnerable will be regions with poorly diversified economies, where maintaining budget balance will require strict spending discipline and the search for new domestic growth drivers. Regional debt is likely to rise to around RUB 3.6 trillion and possibly higher,’ the analysts said.
Regional budget execution in 2025 took place against a backdrop of persistently high interest rates, weaker global energy prices, a stronger rouble and intensifying sanctions pressure.
‘Weaker domestic investment demand and a decline in rouble-denominated export revenues have eroded corporate profitability, leading to lower corporate tax receipts. As a result, even fiscally stronger regions have been forced to increase borrowing, primarily through commercial loans, and overall debt burdens have risen, with risks of financial instability becoming particularly acute for subsidy-dependent regions with limited economic potential,’ economists said.
ORIGINAL: NG/Debt Relief Swapped for Technological Leadership
