Nabiullina Started Up A Printing Press In Russia
- 4.09.2026, 19:19
To fund the military budget.
Russian authorities have tapped into the Central Bank’s money supply to replenish the federal budget, which spends one out of every three rubles on the war and ended the January–July period with a deficit of 6.5 trillion rubles, writes The Moscow Times.
On Wednesday, September 2, after a six-week hiatus, the Russian Ministry of Finance resumed the placement of government bonds and sold 1 trillion rubles’ worth of securities in a single day. By comparison, over the previous two months it had managed to raise only 10 billion rubles for the budget, and 1.5 trillion rubles from April through June. This year’s record issuance covered two-thirds of the quarterly borrowing target: the budget received 939 billion rubles.
However, on the very same day, the Central Bank of the Russian Federation provided banks with nearly the same amount in the form of loans, as noted by Sergey Aleksashenko, a former Deputy Minister of Finance and Deputy Chairman of the Central Bank. According to the regulator’s own statistics, it injected 953 billion rubles into the banking system through repo transactions. In other words, all of the credit institutions’ expenditures on the purchase of federal loan bonds (OFZs) were immediately offset by funds from the Central Bank. “A coincidence? I don’t think so,” Aleksashenko remarks ironically.
Economist Vladislav Inozemtsev links the Ministry of Finance’s large-scale borrowing to a hidden money issue. Banks receive loans from the Central Bank using OFZs—which they purchase from the Ministry of Finance—as collateral. As a result, government securities remain on the Central Bank’s balance sheet, and the volume of such transactions is growing. According to its own statistics, since the beginning of the year, the regulator has provided banks with 1.695 trillion rubles in repo loans, and their total volume has reached 5.334 trillion rubles.
The Bank of Russia is lending money to the Ministry of Finance, using the balance sheets of state-owned banks as a cover—it acted in the same way in December 2024 and November 2025, Aleksashenko notes. At that time, amid a deteriorating budget situation, the Ministry of Finance borrowed 2 trillion rubles and 1.7 trillion rubles, respectively, each time using floaters—securities with a floating interest rate.
Without assistance from the Central Bank, it is becoming increasingly difficult for credit institutions to finance the budget deficit. Against the backdrop of a cash outflow, the liquidity deficit in the banking system is growing, according to Raiffeisenbank analysts: by early September, it had reached 2.6 trillion rubles.
When drafting this year’s budget, the Ministry of Finance expected to reduce the deficit from 5.7 trillion rubles last year to 3.7 trillion. But by the end of the first quarter, the “hole” in the treasury had already exceeded the annual target, and by the end of the year, according to the government’s internal estimates, it could reach 9 trillion, sources familiar with the situation told Bloomberg. According to them, to bring the deficit under control, the authorities cut spending on all civilian items by one-third starting in April and instructed government agencies to prepare for the layoff of 15% of their staff.
War expenditures remain a headache for the budget: they could exceed the budgeted amount by 4–5 trillion rubles. To fund the Ministry of Defense’s demands, the Ministry of Finance intends to take on 2–3 trillion rubles in additional debt in addition to the spending cuts, Bloomberg sources said.