Russia’s banks are reportedly seeking to arrange bailouts from Moscow as borrowers struggle to repay loans across the war-battered economy.
At least three of the country’s biggest banks are investigating the possibility of a state rescue, according to Bloomberg News, in the latest sign the nation is struggling under the pressure of its invasion of Ukraine.
Officials are said to have ordered banks to avoid disclosing the full level of bad loans and instead to restructure their books to present a healthier image. But this tactic may be nearing the end of the road, requiring support from Moscow.
Russia’s economy is under strain from the cost of Vladimir Putin’s war in Ukraine, sanctions imposed by Western nations, the loss of manpower both to the armed forces and to flight abroad, and the drop in oil prices, which threatens a critical source of revenues for the government.
The country’s economy grew by 4.3pc last year, according to official estimates, supported by Moscow funnelling resources into the war. One rouble in every three spent by Moscow goes on the military.
However, the wider private sector has suffered. The purchasing managers’ index, an influential survey of the private sector, has fallen to its lowest level since the full-scale invasion began, indicating business activity is declining.
Growth is expected to slow sharply this year. Analysts at Goldman Sachs predict GDP growth of a much more modest 0.5pc, despite the vast military expenditures.
Spiralling food prices and labour shortages have also pushed inflation into double digits. Ordinary Russians are struggling to buy some of the basics, with even potatoes now in short supply.
The central bank is struggling to control the situation despite keeping interest rates at 20pc.
The government’s finances are also under strain from large bonus payments and high wage offers for soldiers, though these have helped support troops’ family finances even in the face of booming inflation.
Moscow’s oil revenues are also down by a third from last year, after the price of a barrel on international markets – not all of which are accessible to Russia – dropped from $85 (£63) a year ago to $67 now.
Analysts at Goldman Sachs expect the rouble to depreciate by as much as 30pc against the dollar over this year, a move that would be expected to further increase the cost of imports into Russia.
More pressure looms. Donald Trump has threatened to impose tariffs of 100pc on American imports of products from countries which trade with Russia if Putin does not agree to a deal on Ukraine, in a move which threatens to further isolate the rogue state from the wider global economy.
