On November 3, Russian PM Mikhail Mishustin authorised another 1 trillion rubles in government bonds beyond the 2026 plan, pushing the borrowing ceiling to 6.5 trillion rubles while the projected deficit nearly doubled to 7.3 trillion rubles, or 3.2% of GDP.
The Budget Gap
Russia began the year planning to borrow about 5.5 trillion rubles domestically and run a deficit of roughly 3.8 trillion rubles. The gap already stands at about 5.2 trillion rubles. Oil and gas revenues are down 17.2% from last year.
The extra borrowing authority gives the government formal room for its Finance Ministry to exceed the original plan, and not every bond will necessarily be sold. That change is telling for a budget already carrying the cost of Russia's war: the assumptions it started with no longer cover the bill.
How the Cash Moves
OFZ bonds let the state borrow from domestic investors, especially banks, in exchange for interest payments. Those payments already consume more than 9% of the budget. Selling more debt brings in money now, but adds to the payments Moscow must find in future budgets.
Banks rely heavily on Central Bank repo funding. Outstanding repo debt is around 6.5 trillion rubles. The trajectory is stark: the figure fell close to zero in 2024, then climbed sharply through 2025 and 2026. Banks can borrow against collateral to obtain cash and buy government debt, but that leaves the market dependent on continuing liquidity from the regulator.
A funding arrangement in which the state’s growing appetite for debt and the banks’ need for central-bank cash reinforce each other can keep auctions running; it cannot make the interest cost disappear.
Saying every ruble of new bonds is directly printed by the Central Bank would be something else entirely. Russia is choosing to fund its war while oil and gas income falls and its deficit grows. More bank money tied up in government paper also means tougher competition for the credit civilian businesses need. The budget does not have to collapse tomorrow for that choice to damage the rest of the economy today.
