Russia writing off regional debts to avoid admitting financial collapse, FISU says

According to Ukrinform, the Foreign Intelligence Service of Ukraine (FISU) reported this.

The debt relief applies to the Republic of Sakha (Yakutia), the Republic of Tatarstan, the Khabarovsk territory, as well as the Vladimir, Kurgan and Omsk regions.

According to the agency, Russia's Finance Ministry forecasts that the combined regional budget deficit will reach 1.9 trillion rubles ($26.6 billion) in 2026. More than 20 federal subjects have already been officially classified as financially troubled.

The main causes include declining tax revenues, rising social spending and the growing burden of war-related expenses increasingly shifted from the federal government to regional authorities.

Debt write-offs have become a regular practice. In 2025, 58 Russian regions used the mechanism, reducing their debt burden by approximately $3.2 billion. In 2026, 54 regions have already had another $2.4 billion in obligations canceled.

"In fact, the Kremlin is forced to grant a massive financial ‘pardon’ to its own constituent entities every year to prevent them from declaring default on live television," the FISU said.

The intelligence service argued that the situation reflects the deepening dependence of Russia's regions on the federal center amid the war.

"The regions’ own revenue base is not growing, expenditures are not being cut, while the war economy is draining resources faster than they can be replenished. Writing off debts provides regions with short-term relief but does not address any of the causes of the crisis," the agency said.

Earlier reports indicated that Russian authorities are seeking to bring retirees back into the workforce amid mounting economic pressures.