Economic Problems In Russia Have Spread Even To Regions With A Powerful Military-industrial Complex
- 27.02.2026, 14:39
Bloomberg has read some interesting documents.
The deteriorating economic situation and investment conditions, the crisis of non-payments, the rising wave of layoffs - these problems are increasingly affecting not only the civilian sector of the Russian economy, but also the military. The economic situation in the Nizhny Novgorod region, which is one of the strongholds of the military-industrial complex, is of "serious concern," according to documents seen by Bloomberg.
In a February letter to then-deputy governor Andrey Sanosyan (he left office 10 days ago), the Nizhny Novgorod Association of Industrialists and Entrepreneurs (NAPP) lists a range of problems, highlighting a sharp drop in capital investment, profits, orders and production over the past year. The association, which surveyed more than 50 regional companies from the defense and civilian industries, as well as 70 companies in the Volga region, urges them to resume investment, return preferential loan rates and accelerate payment of bills. The letter names state corporations, including those working for the war - Rostec, the United Shipbuilding Corporation, Roscosmos and Rosatom - as one of the main culprits for overdue payments.
NAPP urges local authorities to raise these issues with the federal government. Which has no plans to increase military spending this year; however, in previous years it has usually been higher than budgeted, rising by 30 percent in 2025.
The government has budgeted a deficit of 3.8 trillion rubles for this year. But on Wednesday, Finance Minister Anton Siluanov acknowledged that "within a couple of weeks" the budget will have to be overhauled by lowering the price of oil. That will mean lower revenues and a growing deficit.
Regional authorities are also unlikely to be able to seriously help businesses with money. In 2025, their aggregate budget deficit grew 3.6 times, reaching a record high of 1.478 trillion rubles, the ACRA agency calculated on the basis of data from the Russian Treasury.
Regions have not collected the key tax for themselves - corporate profit tax: due to the deteriorating business situation, its revenues fell by 9% compared to 2024, or by 493 billion rubles.
Nizhegorodsky authorities expect a deficit of almost 30 billion rubles this year, which will be partially covered by federal funds.
In the meantime, companies in the region complain that subsidized loans for them have expired and they are forced to borrow at commercial rates exceeding 20%. Companies lack not only investment capital, but also working capital, because the debt of counterparties to them has exceeded 100 billion rubles. Financial problems are spreading along the chain due to the fact that the main customers, including military-industrial complex enterprises, delay payments.
According to the survey of regional enterprises, attached to the NAPP letter, if the situation does not improve, about 20 thousand people may lose their jobs in the region in the second half of the year. Several large companies, including those considered systemically important, have already cut their working hours to reduce costs, the documents say.
As the situation continues to deteriorate, a number of companies may soon run out of cash reserves, forcing them to cut production and staff, and in the worst case - to declare bankruptcy, entrepreneurs warn.
In the meantime, last year Rosstat recorded almost 100% employment in the Nizhny Novgorod region, and Governor Gleb Nikitin reported real wage growth of 7.2% in the first 10 months.
But during 2025, the number of companies in civilian sectors that recorded a reduction in orders rose from 57.1% in the first quarter to 69.2% in the fourth quarter. The situation is slightly better in the military-industrial complex: the number of such companies decreased there, but at the end of the year they were still 30% (at the beginning - 50%).
At the same time, 60% of defense companies at the end of last year reported a reduction in investments compared to 2024. In the civilian sector, in the second and third quarters, there were 100% of them, and in the fourth quarter - 92.3%.