Brendan Cole is a Newsweek journalist in London in the United Kingdom. Its objective is Russia and Ukraine, in specific the war introduced through Moscow. It also covers other geopolitical spaces, adding China. Brendan joined Newsweek in 2018 by International Business Times and, as well as in English, meets Russian and French. You can touch Brendan by sending an email to B. cole@newsweek. com or follow him in his account x @brendanmarkcole.
Based on the facts, it was observed and verified first through the journalist, or informed and verified of competent sources.
Russia finances its army expense thanks to a ghost plan that represents a “seismically disruptive” risk for an economy already shaken through inflation and higher interest rates, according to an analysis.
Craig Kennedy, a former investment banker of Morgan Stanley, described how the Russian State forces banks to factor preferential loans to the army that make possible the war efforts of President Vladimir Putin in Ukraine.
This provides the Russian economy for a greater fitness bill, deceptive experts thinking that Putin can continue army record spending any negative effect on the country’s finances, according to Kennedy.
Newsweek contacted email at the Russian Ministry of Finance, the Central Bank of Russia and Kennedy to comment.
Despite the difficult sanctions, the Russian state media said there were GDP expansion forecasts of 2. 5% in 2025, however, this happens in the middle of a higher inflation rate of 8, 9%, which extremely cheerful through of a personnel shortage and a record key interest. .
In December, Putin approved a record defense budget, which puts 32. 5% of the general government expenses in reserve by 2025, $ 126 billion.
Kennedy’s conclusions recommend that the Russian economy can face the cave of companies and banks with their army expenses without stopping, which recommends that Western in kyiv can triumph over Moscow’s ability to celebrate a war of wear.
Kennedy said Russia has followed a two -way strategy to finance its war its defense budgetary expenses, as well as a planned budget of similar length allowed through a law followed on February 25, 2022, which forces Russian banks to Receive preferential loans to the Army – Related companies.
During this period, Russia had to face an expansion of 71% of the debt of companies $ 415 billion or 19. 4% of GDP, expense higher than oil and fuel spending and the defense budget, Kennedy said in her Navigation in the newsletter in Russia.
This is that the general prices of War of Russia “far exceed” which would suggest official budgetary expenses.
This financing of understanding defense was more difficult to occupy the moment of 2024, to reverse inflation and expand interest rates for “real” borrowers of the economy to 21%, creating the previous requirements of situations for a systemic loans crisis “Kennedyy said.
He said that preferential bank loans had been granted up to $ 250 billion to defense entrepreneurs, many of whom had poor credit.
This increases the increases in inflation and the interest rate and the dangers that trigger a systemic crisis and the delays in Moscow more time for war, closer will be for corporations and banks than the Russian government would be obliged to discover .
When informing Kennedy’s conclusions, Financial Times said Putin “sits in a monetary time bomb for his own manufacturing” and that Kyiv’s allies will have to reject Moscow greater access to external funds.
“Putin requested the Russian banking system, the banks required to provide the designated corporations through the selected preferential conditions of the government. “
Craig Kennedy, a former investment banker in substitution: “For Moscow, the threat of credits occasionally, with its prospective seismically disturbing, it would be much faster to be worried that the slow combustion threats such as the fall in GDP. “
Vasily Astrov, the main economist of the Vienna Institute for Foreign Economic Studies told Newsweek: “War expenses are a transparent budget duty for the State, while preferential credits are not. ” And “preferential” interest rates had been covered through the state’s pocket. “
The Russian economy continues to deal with turbulence in 2025. Economist Igor Lipsits declared in The Independent Novaya Europe that the measures of the Russian Central Bank to combat opposite to inflation, such as hiking at the key interest rate, will mean less goods and Services, upper retail value and a fall in the genuine source of income for Russians.
The key interest rate of the Central Bank of Russia is 21%, which was the highest since the war began, it has not been higher as expected in December.
Astrov said that if the rates remained in manageable titles and that the resolution of the Central Bank to put its policy of hardening problems in this direction, “I think that the dangers of monetary stability are too important in the predictable future. “
Brendan Cole is a Newsweek journalist in London in the United Kingdom. Its objective is Russia and Ukraine, in specific the war introduced through Moscow. It also covers other geopolitical spaces, adding China. Brendan joined Newsweek in 2018 by International Business Times and, as well as in English, meets Russian and French. You can touch Brendan by sending an email to B. cole@newsweek. com or follow him in his account x @brendanmarkcole.
Brendan Cole is a Newsweek journalist in London in the United Kingdom. Its objective is Russia and Ukraine, in specific the war introduced through Moscow. It also covers other geopolitical spaces, adding China. Brendan joined Newsweek in 2018 by International Business Times and, as well as in English, meets Russian and French. You can touch Brendan by sending an email to B. cole@newsweek. com or follow him in his account x @brendanmarkcole.