A Prominent Economist Predicted The Fall Of Russia Following Its Economy

• 12.02.2026, 23:39

Putin is already having to make budget cuts.

The Russian economy is rapidly sliding into a systemic crisis. The budget deficit is growing, the National Welfare Fund is melting, the oil model is collapsing, and banks are holding on to emergency injections.

Why is Russia returning to the period of the 1990s and how will it turn out for ordinary people? Economics professor Igor Lipsits talked about this in an interview with YouTube channel of journalist Evgeny Kiselyov. The website Charter97.org cites the most interesting fragments of the conversation.

Economist Igor Lipsits draws attention to the huge deficit in Russia's budget. The Russian Finance Ministry, he says, has been cutting spending for three months:

- The story is curious. In January, approximately 1.9 trillion rubles was spent. Indeed, I am sometimes surprised by the behavior of some colleagues when, say, economist Sergei Aleksashenko wrote that "the Russian Finance Ministry has performed a miracle", it managed to keep the budget deficit at 5.7 trillion rubles, although some experts (clearly alluding to me) promised 7.8.

And where he usually puts a point, other people who are scientists start to figure out where this "joy came from". And then it turns out that the RF Ministry of Finance, despite the fact that you named such a figure, has been conducting an unspoken budget sequestration for months. I remind you what sequestration is: it is when the budget is approved, some expenses are prescribed, some payments are promised, and the state says: I don't have money - and refuses to fulfill its obligations, doesn't pay something, cuts back.

The RF Ministry of Finance has been not paying what it should pay, cutting expenses for almost three months. There is such a feeling that they feel a terrible trouble ahead, they are already cutting expenses, not paying those who should have been paid according to the approved budget. Due to this, the Russian authorities have kept the deficit at 5.7 trillion rubles, although it is quite a strange story to consider it a miracle, because for 2025 the original deficit of 1.3 trillion rubles was approved, but in fact it turned out to be 5.7 trillion rubles.

In fact, the Ministry of Finance has moved to saving expenses, but everything has to be paid for. Economics is such a terrible science, it says: everything must be paid for. Nothing happens for nothing.

The economist believes that Russian state employees will be the first to feel the problems:

- When the state stops paying, then first there are problems with bonuses for the salaries of doctors and teachers. Then suddenly it turns out that some large state corporations have not received money from the budget. And these state corporations, having not received money from the budget, which suddenly began to refuse to pay (although they promised and had to pay), do not pay their suppliers. And the suppliers, not receiving money from large state corporations, start firing people. And people find themselves without earnings.

This is the situation in which the Russian economy is already in. And further it will appear in the news more and more strongly and more and more terrible. We already see that there is an increase in non-payment of wages. In terms of the amount, it is still absolutely minuscule, it is not even serious to say, but the dynamics is very fast. Everything starts with the first step, and then it goes upwards. Suddenly it turns out that a lot of people are living with delayed wages. This was the case in the 90s, and this is just one of the symptoms of what I was saying: Russia will return to the 90s in many signs, symptoms and processes.

Russia has returned to non-payments. Non-payments have turned into wage delays. Let's wait for pensions to be delayed. This is not far off either, because pension payments in Russia are backed up by the state from the Social Fund, and the state is backed up by the National Welfare Fund. And it is also being actively spent now. And that is why there is such a clear prospect when people will begin to delay the payment of pensions.

Evgeny Kiselev recalls that in 1991-1992 salaries in Russia were paid on time, but in 1994-1995 delays in payments became the norm. Only a few years separated the country from neat payments to a complete breakdown. Economist Igor Lipsits responds:

- Back then there was a different attitude to wages, to the worker. There was still some inertia of the Soviet Union, a country where "the working man rules", where "everything is for the sake of the working man". How could a labor man not be paid his wages? This was all destroyed by the fire of the 90s, now in Russia the attitude to paying workers is so cynical that this transition will happen much faster.

And Russia's reserve is disappearing. Russia, very amusingly, in November, through the mouth of Finance Minister Anton Siluanov swore and swore that they would not touch the National Welfare Fund (NWF). "I'll be a bastard, I give you my tooth that we won't touch the National Wealth Fund," said the Finance Minister.

The year 2026 has come, and we have to pull out his tooth, and not just one, but many, because he is spending closely. Recently, the Ministry of Finance has started selling foreign currency from the FNB, because there is no revenue for the budget and it is necessary to plug the holes. Currency from the National Wealth Fund is being sold quite actively.

Already now quite a lot of money from the National Wealth Fund has been placed on deposits in the largest Russian banks to give them money. Apparently, there is not enough money coming in from the public to cover the capital problems of these banks. And they took, I think, 450 billion rubles from the National Wealth Fund and put it on deposits so that these large banks would not fall. Whether they will hold on - I don't know, I can't say. The situation is becoming more and more tragic.

There is a marvelous construction company "Airplane", which "magnificently" manages the business. And as you know, this week "Samolet" came to the government, asked for 50 billion rubles for a bailout and is ready to give up the controlling stake, if only they would give it some money. And the banks are behind Samolet. Because all the housing that Samolet can't sell was built with bank loans. If Airplane can't sell the housing, the banks can't return the money. We had a similar situation on the eve of the 2008 crisis.

But in 2008 it was possible to find money. Putin was rich then, he had oil revenues then. And he gave money to those who needed it, and supported the "right" people.

Remember there was such a thing as a "systemically important bank"? They were given money. They gave money to systemically important companies. They didn't give money to the rest of us. But now Putin has no money for this.

Evgeny Kiselev asks how much budget revenues from oil and gas have been reduced. Igor Lipsits gives shocking figures:

- Compared to last year - twice as much. Impressive? And there are no good prospects. Note that India turned out to be a wrong girl, started "walking on the side" and reducing Russian purchases. Because she was under a lot of pressure, and India is not China.

I have been saying all along that if you want India to stop buying Russian oil and gas, you have to give India some compensation, some kind of gift to give the girl. The US was scaring her with duties - India would not give up Russian oil. And then, finally, Trump got it: the girl was offered a gift in the form of a reduction in duties on supplies to the United States. And the girl said: yes, now I will no longer love the Russian, I will buy Venezuelan oil. And this is a terrible disaster for Russia, we are talking about a two-fold drop in income. Maybe more. Because India used to take 35-40% of all oil exported from Russia.

If now it will not take it, Russia will have practically nowhere to put its oil. Or it is necessary to give China such discounts that it is scary to even mention. There is already information that a batch of oil is going to China at the price of 25 dollars per barrel.

If you recalculate it in 1998 dollars, it is about 10-12 dollars, the same level at which Russia defaulted in 1998. There is nowhere to put oil except China.

Evgeny Kiselev adds that once former Russian Prime Minister Mikhail Kasyanov told about the arrival in Moscow of Venezuelan ruler Ugo Chavez. The latter told him about oil prices, "Mikhail, 25 per barrel is our Stalingrad. We must not go lower." Lipsits continues his account of the crisis of the Russian oil industry:

- Already now we are saying that some Russian fields are unprofitable. And when you talk about it, people say: come on, there's no such thing as unprofitable oil. "You're talking nonsense, professor." I'm not talking nonsense. In Russia, the cost of oil production at many fields is 40-45 dollars. Look, even representatives of the oil industry are talking about it. Therefore, $25 is a disaster, we are trading oil at a loss.

I never invent anything, I only analyze facts. Look: Lukoil, Russia's second largest oil company, came to your government and also came to ask for money. More precisely, it asked to reduce its taxation, to cut taxes. The government does not want to take additional taxes from Lukoil and replenish the budget - there is nothing to take away, now Lukoil has come to ask for lower taxes, otherwise there will be trouble.

So you have "Samolet" - the largest real estate developer in Russia. You have Lukoil, the second largest oil company in Russia. You have the Russian Metallurgical Industry Association coming to ask you to remove the excise tax on liquid steel. The situation is such that the largest pillars of the Russian economy are coming to the budget and saying: cut taxes, or we will go bankrupt. And at this moment, the government is going to raise their taxes without any jokes. Because now the government has such a hole in the budget that they are discussing raising pollution fees for ferrous metallurgy.

The state is in a state of hysteria. It needs money. And where it needs to give tax breaks, it is trying to raise taxes. But, as you understand, it is not very difficult to predict how this will end.

Evgeny Kiselyov draws attention to the expression "breaking point" used by the economist in Telegram. He also refers to the publication The Washington Post, which says that Russia's military economy, pumped up with investments and payments to those recruited to the front, could enter a crisis in three to four months. According to the publication, Putin has been warned about this by people in his entourage. Kiselyov asks for an assessment of the possible scenario and signs of an impending catastrophe.

Lipsits tells us how this crisis might look like:

- There will be fairly massive bankruptcies of large companies, followed by a crisis situation in Russia's largest banks. There will be an attempt by depositors to take their money out of the banks - what is called "bank run", "bank run", there is such an English term. They will not give them the money, restrictions will be imposed on the issuance of money from banks - "in order to stabilize the banking system of the Russian Federation and to protect depositors' money.

You can then check whether my words coincide with what the Ministry of Finance and the Central Bank will write. That's why there will be restrictions on the issuance of money - simply because otherwise the banks will collapse.

I am told: banks cannot collapse, we have a reserve system in Russia. I love people who are semi-literate economically, but find it necessary to correct me regularly. They explain that I don't understand something about economics. Yes, Russia has a reserve system, yes, Russian banks reserve, yes, there is a system of partial reserves. Read an economics textbook - everything is explained there. But the fact is that these reserves will not be enough for all banks.

Yes, there are several funds to save Russian banks: the Deposit Insurance Agency, there are crisis funds. Everything is true, everything is true, but they are able to save one, two, maximum - three large banks. If ten large Russian banks start collapsing, there will not be enough money.

What will happen then? Naturally, no one will let the banks fall. That's understandable. But then they will be given stabilization loans. That is, the Central Bank of Russia will print a huge number of trillions of rubles to give banks this money. Just understand: there are 67 trillion rubles in Russian banks. So, if at least every fourth person wants to withdraw his money, then we will need to issue about 15 trillion rubles. The banks do not have that kind of free money. So, these 15 trillion will have to be printed.

This will mean that additional money supply will appear in the economy, there will be a sharp jump in inflation, hyperinflation may begin. This is how the road looks like: "Airplane" runs out of money, ferrous metallurgy runs out of money, "Lukoil" runs out of money, Russian Railways and so on: wherever you poke, there is trouble everywhere.

Russia is committing suicide, it is killing its economy, and when the economy is killed, the country dies. I formulate my position very clearly and do not hide it in any way: I believe that Russia is committing suicide with the help of the Russian-Ukrainian war. And then, when the economy collapses, the country will also collapse - just as the Soviet Union collapsed.

Kiselev says that Ukraine's municipal infrastructure is in the worst condition because of constant missile and drone strikes: people are left without light and heat, the cities look like scenery for dystopia. At the same time, power and housing and utilities outages are already occurring in Russia as well. Is there a direct link between this?

The economist believes that there is a link:

- In fact, Russia should have been closed for a major overhaul five years ago. The country is extremely worn out, old, very much defective.

It should have been stopped, shut down and all the money it earns should have been used to repair the infrastructure for living. If this had been done, it would have been possible to live normally in this country until the end of the 21st century. Instead, they started preparing for war, then started the war - and all the money went there, and not only today's money, but also tomorrow's.

The problem is that Russians do not realize that they have threatened their future for a couple of generations ahead. They didn't just spend a huge amount of money on the war - they increased the national debt, lost their main sources of income - the European oil and gas markets. And now Russia is doomed to become poorer and poorer for a generation to come and become a miserable, miserable territory with the inability to survive normally.

Russia is a country with an extremely worn-out infrastructure, and it will never be possible to fix it now. I know the word "never" annoys people, but understand a simple thing: on the horizon of two generations, that is, about 50 years, Russia will not be able to restore its public utilities. Simply because it requires money, which Russia will never have.