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- Aggravating obligations: budget expenditures on public debt repayment increased 1.5 times
Aggravating obligations: budget expenditures on public debt repayment increased 1.5 times
Spending from the treasury on servicing the national debt has increased 1.5 times — in the first six months of 2025, it has already exceeded 1.5 trillion rubles, according to calculations by the Accounting Chamber. The reasons are the increase in government borrowing, which is becoming more expensive due to the still high key interest rate. Interest payments displace social and infrastructural expenses, limiting the government's ability to stimulate the economy. This may lead to an even greater increase in borrowing, but there are no systemic risks yet — obligations do not exceed 14% of GDP.
How much do the authorities spend from the budget on servicing the national debt
In January–June 2025, the federal treasury's expenses for servicing the national debt amounted to 1.581 trillion rubles, which is slightly less than half of the planned expenses for repayment of obligations by the end of the year (almost 3.2 trillion). Such data are provided in the report of the Accounting Chamber (JV) on the budget execution for the first half of the year (Izvestia analyzed them).
Compared to the same period in 2024, expenses under this item increased by one and a half times. Then they amounted to just over 1 trillion rubles.
According to the auditors' calculations, the share of funds for servicing the national debt in the total amount of treasury spending was 7.4%. Compared to last year, it increased by 1.4 percentage points.
The cost of servicing the national debt is already reaching a significant amount. Almost 1.6 trillion is more than the planned expenditures for a number of national projects combined this year, for example, "Youth and Children" (almost 460 billion), "Long and active life" (370 billion), "Efficient and competitive economy" (just over 200 billion), "Efficient transport Sistema" (slightly more than 130 billion), "Environmental well-being" (about 50 billion), "Tourism and Hospitality" (almost 45 billion), "Personnel" (almost 18 billion), follows from the financial plan data. In total, it is planned to spend almost twice as much on servicing the national debt this year.
According to the joint venture, over the past six months, the vast majority (1.513 trillion) has been used to repay domestic obligations — federal loan bonds (OFZ) and government guarantees. The remaining 67.7 billion ($840 million) accounted for the external public debt.
Why is Russia's national debt growing
The increase in government debt servicing costs is due to two factors — an increase in government loans and their cost, says Natalia Milchakova, a leading analyst at Freedom Finance Global. Thus, the volume of public debt increased by almost 1.5 trillion compared to 2024, the auditors estimated, to 30.5 trillion. At the same time, domestic borrowings increased by almost 2.5 trillion to 26 trillion.
Izvestia sent a request to the Ministry of Finance with a request to explain the reasons for the increase.
However, increasing government borrowing is a tool for implementing the monetary policy of the Bank of Russia, which makes it possible to contain inflation, says Mikhail Gordienko, Professor of the Department of Finance for Sustainable Development at Plekhanov Russian University of Economics. From October 2024 to June 2025, the key rate was at a record high of 21% per annum. It was only in early summer that the regulator began a cycle of rate cuts — at the last meeting, it lowered it to 17%.
A high key rate increases the cost of debt, encourages individuals and legal entities to accumulate and invest, including in debt instruments, such as OFZ, he explained.
— The average yield on federal loan bonds in the first half of 2025 decreased to 13.6-14% per annum, while in 2024 it increased to 16-18%. In other words, the Ministry of Finance used to borrow more expensive on the bond market, but this year the volume of borrowings has increased significantly and reached almost 30.5 trillion rubles by the end of the first half of the year," Natalia Milchakova clarified.
Meanwhile, the external debt in early July was at the level of $54.3 million, or 4.2 trillion rubles. It is decreasing compared to last year, but at a very slow pace — by 7%, if you count in rubles.
This year, the upper limit of domestic debt is 30.6 trillion, and external debt is $59.9 billion, according to the materials of the joint venture. Russia is still far from reaching this ceiling: at the beginning of September, the total volume of domestic borrowings amounted to 26.8 trillion, and external borrowings amounted to $53.9 billion.
What are the risks in building up the national debt
In early September, Finance Minister Anton Siluanov noted in an interview with RBC that there are three restrictions for actively increasing the national debt. First of all, the Russian financial market is not so large — we currently have no external investors due to the geopolitical situation. Also, a further increase in expenses to cover obligations will lead to crowding out the rest of the expenses — that is, the country will have fewer opportunities to direct resources to priority tasks.
In addition, in order to implement the new mandatory expenditures, the authorities will either have to increase revenue items (raise taxes) or reduce costs, said Vladimir Eremkin, senior researcher at the IPEI Structural Research Laboratory at the Presidential Academy. He clarified: there is always a risk that the government will try to close part of the debt by issuing it, which will certainly lead to an acceleration of inflation.
The third limitation, according to Anton Siluanov, is the relationship between the volume of borrowings and the rigidity of the PREP. The Bank of Russia has repeatedly noted that the higher the budget deficit and borrowing to finance it, the greater additional demand will be created in the economy and its pro-inflationary impact will need to be offset. In this case, a more stringent DKP will be required, limiting the growth of lending in the private sector, said Olga Belenkaya, head of the Macroeconomic Analysis Department at Finam.
According to Vladimir Eremkin, in order to reduce the national debt, first of all it is necessary to reach a deficit-free budget. This year, the shortfall in the financial plan is expected to be significant — the updated forecast for the year includes an amount of 3.8 trillion rubles. By the end of August, the deficit was almost 4.2 trillion. At the same time, by the end of seven months, the figure was much higher — 4.9 trillion.
In addition, the expert continued, it is important to stabilize inflation, which stood at 8.14% in August. A steady slowdown in price growth will allow the Central Bank to further reduce the rate — this will reduce coupon payments and enable the Ministry of Finance to carry out new borrowings at a lower interest rate, he explained.
— In terms of absolute values, the level of public debt in Russia is considered low — 13.7% of GDP. Its structure is such that most of it is accounted for by ruble borrowings, and this minimizes currency risks. Concerns can only be caused by the rate of increase in borrowing volumes and a sharp increase in the cost of servicing government debt," believes Vladimir Eremkin.
Now there are no risks of default, as there is still money to cover the debt — budget revenues, funds from the National Welfare Fund, as well as gold and foreign exchange reserves of the Bank of Russia for a rainy day, Natalia Milchakova agrees.
At the same time, Russia's public debt itself continues to grow, and this process is likely to continue in the coming years, says Igor Rastorguev, a leading analyst at AMarkets. The authorities actively use borrowing as a tool to close the budget deficit.
At the same time, in international comparison, the Russian national debt is still comfortable. For comparison, Japan already has more than 260% of GDP, the United States has 129% of GDP, and Canada has 113% of GDP, added Mikhail Gordienko from Plekhanov Russian University of Economics.
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