Pity Russian savers. In June, the Russian Finance Ministry announced its support for draft legislation to transfer nearly $40 billion in private pension savings into government coffers. Later that month, Russian Communist Party leader Gennady Zyuganov encouraged President Vladimir Putin to make the most of the almost $1.8 trillion that Russian firms and individuals hold in bank accounts to support state finances. According to Zyuganov’s calculations, “that is three state budgets … sitting there and enriching bankers.”
Pondering whether the Russian economy will collapse is in fashion these days—but that may be the wrong question to ask. The better question is which sources of politically affordable money the Kremlin can still tap to finance military expenses while maintaining social stability. True, many Russians got richer during the war’s first two years—wages surged, military factories created plenty of jobs, and signing bonuses for new soldiers flowed to the poorest regions. Yet that redistribution machine is now grinding to a halt as the Kremlin is fast exhausting all the money pots it can easily access.
Pity Russian savers. In June, the Russian Finance Ministry announced its support for draft legislation to transfer nearly $40 billion in private pension savings into government coffers. Later that month, Russian Communist Party leader Gennady Zyuganov encouraged President Vladimir Putin to make the most of the almost $1.8 trillion that Russian firms and individuals hold in bank accounts to support state finances. According to Zyuganov’s calculations, “that is three state budgets … sitting there and enriching bankers.”
Pondering whether the Russian economy will collapse is in fashion these days—but that may be the wrong question to ask. The better question is which sources of politically affordable money the Kremlin can still tap to finance military expenses while maintaining social stability. True, many Russians got richer during the war’s first two years—wages surged, military factories created plenty of jobs, and signing bonuses for new soldiers flowed to the poorest regions. Yet that redistribution machine is now grinding to a halt as the Kremlin is fast exhausting all the money pots it can easily access.
Private capital was the first money pot that Moscow turned to in order to finance the war, starting with confiscations. A tally from Cedar, an outlet run by exiled Russian economists, shows that prosecutors filed claims to seize assets worth roughly $60 billion between early 2022 and late 2025. Cedar’s data ends in 2025, but seizures are continuing apace. In May, a court transferred $7.6 billion worth of assets from Rusagro founder Vadim Moshkovich to state ownership, the largest seizure in the current nationalization wave. (Moshkovich’s wife kept her luxury apartment and country house.) To avoid such a fate, Russia’s wealthiest are resorting to creative options. In March, Suleiman Kerimov, whose fortune stands at $11 billion, generously offered to donate $1.4 billion to the state coffers. Meanwhile, other rich Russians are busy moving their wealth abroad.
Most entrepreneurs get to keep their companies, but more of what they earn is being extracted through taxes. In 2025, the profit tax rate climbed to 25 percent (up from 20 percent), a move that Moscow estimates will generate $22 billion per year in extra revenue—a bit more than one month of current military spending. In April, plans for a windfall tax on 2025 corporate profits in excess of the 2018-19 average kept Russian CEOs awake at night. No measure has followed, perhaps because the Kremlin’s hopes for a fiscal bonanza were misplaced. As chief business lobbyist Alexander Shokhin put it, “All the mechanisms exist in the Tax Code. It’s another matter that there’s no profit, many are in the red.” The data concurs: Russian firms’ expenditures exceeded their revenues by around $150 billion in 2025.
With not much left to get from firms, Moscow’s logical next move was to shift some of the war’s rising costs to the balance sheets of state-owned companies and regions. Murk and deniability are the method. Pundits trying to interpret the government numbers typically read just the federal budget, parsing its defense outlays to the last kopeck. Few actually look at the accounts of state-owned firms or the budgets of Russia’s 89 regions. (The Russian government considers that it controls 89 federal regions, republics, and territories, but six of these are illegally annexed parts of Ukraine.) Disclosure is patchy and fragmented across many entities, making it difficult to calculate a headline price tag for the war. Yet Moscow’s tactics on this front are also hitting their limits.
Start with state-owned cash cows like such as Gazprom, which used to contribute around around 10%around 10% percent of the Russian federal budget. In 2022, the Kremlin ordered the firm to inject the equivalent of $72 billion into state finance, forcing the company to hand over its entire 2021 profit. In 2023 and 2024, the company had to contribute an additional 50 billion rubles (currently $638 million) per month, pushing the firm to record its first annual loss in almost a quarter century in 2023. The company returned to profitability in 2024, but after years of state extraction, there is little left to milk. Gazprom’s market capitalization has shrunk to $26 billion, a mere one-fifteenth of its $367 billion peak in 2008.
Russian regions provide another textbook case of Moscow’s attempts to make the most of those rarely audited balance sheets. The 2025-27 federal budget pencils in cuts in the social spending category, which could include pension, social security, and maternity payments. The move comes with a call for regions to shoulder more of these expenses. It is unclear, however, where they would find the money. Federal transfers to the regions are frozen at their nominal 2021 levels; as of last month, this translated into a cut in inflation-adjusted terms of roughly one-third since the start of the war. On the spending side, the war has brought new obligations to the regions. They finance death compensation payments, the reconstruction of occupied Ukrainian territories, and the bulk of bonuses for military recruits.
These signing bonuses illustrate the regions’ fiscal headache. In October 2025, five regions—Chuvashia, Mari El, Orenburg, Samara, and Tatarstan—canceled regional handouts for new recruits. The drop was steep; in Samara, volunteers received only the federal floor of 400,000 rubles (nearly $5,000), down from a high of 3.6 million rubles (around $45,000). As recruitment numbers sank, all five regions hastily restored large bonuses three months later. With Moscow’s orders to do more with less, it is no wonder that 73 out of 89 regions posted deficits in 2025, up from 49 in 2024. (These tallies include annexed Ukrainian territory.)
In a sure sign of growing financial pressure, the Kremlin is now turning to the third and most politically sensitive money pot: households. In January, the value-added tax (VAT) rose to 22 percent (up from 20 percent), a move that Moscow explicitly tied to defense and security needs. Unlike expropriations targeting billionaires, such measures affect virtually all Russians. The Finance Ministry estimates extra revenues of around $13 billion per year, barely one month’s worth of military spending. The squeeze on households goes beyond VAT: The government has penciled in a 27.9 percent rise in utility rates for gas, electricity, and heating over 2026-28—in stark contrast with the official projection of around 5 percent inflation this year.
The potential pension raid forms the final layer of this strategy. A draft law would allow the transfer of roughly $40 billion from private pension accounts to an existing state-managed pension fund that invests broadly half of its portfolio in government bonds. For Moscow, using pension pots to finance the war-fueled fiscal deficit is an elegant solution to a tricky problem. Despite the rise in oil prices that the war in Iran has produced, the budget deficit over the first five months of this year exceeded the Kremlin’s full-year target by roughly 60 percent. Such shortfalls lift Russia’s borrowing needs, but investors are in no rush to buy Russian debt. In June and July, the Finance Ministry had to cancel three of its four bond auctions for lack of buyers. Auctions are now suspended indefinitely.
Of course, a regime that claims to guarantee social stability would never admit to raiding its own people. Last December, the Kremlin proudly announced that state pensions would rise by 7.6 percent this year, slightly above the official inflation rate. Officially, the private pension pots that would fall under state control would not be seized outright. Moscow likes to claim that it is protecting the social contract—while shifting costs to less visible channels.
The April edition of the International Monetary Fund’s World Economic Outlook should be mandatory reading in Moscow. Drawing on data going back to 1946, the report outlines the costs of wartime defense spending. Governments typically manage increased military outlays by cutting social spending and expanding borrowing, with public debt as a share of GDP jumping by 14 percentage points on average. The catch in Russia’s case is that Moscow cannot easily borrow; domestic investors are shunning bond auctions, and Western sanctions have cut off access to international markets. What other states at war do mainly with bonds, the Kremlin must do with a broader mix: the few bonds it manages to sell, plus a combination of confiscations, taxes, and financial engineering that shifts costs off the federal budget and onto various other balance sheets.
None of this means that the Russian economy is about to collapse. The Kremlin still has ways to extract more resources—taxes can be raised, expenses can be cut, and assets can be seized. The challenge for Russian policymakers is that each additional ruble they raise carries a growing political cost. That squeeze is the main transmission channel for Western sanctions. Moscow will not run out of cash anytime soon, but it is certainly running out of politically affordable ways to raise it.