Going for Broke? Putin Admits Russia Has ‘No Spare Money’ as Costly War in Ukraine Grinds on

Russian President Vladimir Putin has acknowledged that his country is facing financial struggles amid ongoing massive expenditures on his war in Ukraine.

"Yes, we have the budget revenues growing, and the deficit is minimal, non-oil and gas revenues have a good performance, oil and gas ones have the incremental growth but there is no spare money," Putin admitted TASS news agency. "Therefore, I very much expect that you will keep a close eye on the financial discipline."

The economic isolation caused by Western sanctions has forced Russia to rely heavily on foreign cash reserves to fund its military efforts, Express reported.

In July 2022, Russia's National Wealth Fund had $143 billion in reserves, but this figure dwindled to $56 billion by the end of 2023. According to expert Owen Matthews, writing for the Spectator in March, Moscow is currently spending about $4 billion a month on the war.

To combat rising inflation, Russia is expected to raise interest rates. Inflation currently stands at 8.6 percent in the country, more than double the 4 percent target set by the Central Bank of Russia.

Bartosz Sawicki, a market analyst at Conotoxia fintech, told Newsweek, "The Central Bank of Russia needs to adopt a tougher stance than previously assumed as required to tame price pressures in an economy characterized by booming consumption and labor force shortages. The looming increase should be perceived as an additional, one-off adjustment and mark the peak of the cycle."

Russia's economic growth of 2.9 percent has been significantly bolstered by its military economy, with a rapid increase in weapons production to support its soldiers in Ukraine.

The International Monetary Fund (IMF) predicts Russia will grow by 3.2 percent this year, outpacing all advanced economies globally.

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The IMF stated, "Despite many gloomy predictions, the world avoided a recession, the banking system proved largely resilient, and major emerging market economies did not suffer sudden stops."

Petya Koeva Brooks, deputy director at the IMF, noted that "robustness in private consumption" within Russia has contributed to its growth.