Russia faces a very important challenge in its war effort in 2025: the country is running out of cash, and its monetary reserves can be exhausted before the end of the year, according to a European economist.
Anders Åslund, a Swedish economist who is a former member of the Atlantic Council, said that the liquid reserves of Russia’s National Wealth Fund may be depleted until the fall of this year.
That spells trouble for the nation’s military efforts in 2025, he said, given how heavily Russia has relied on its wealth fund over the past several years.
Liquid reserves in the wealth fund have been drawn down from $117 billion in 2021 to $31 billion as of the end of November, Åslund noted.
Yet, according to its 2025 budget, Russia is on track to spend a record $130.5 billion on defense this year.
“However, the maximum critical shortage is the investment of the budget, because the new Liquid reserves of Russia deserve to be exhausted in the autumn of 2025,” Åslund wrote in an editorial for Project Syndicate that was published on Tuesday. “Budget discounts will be necessary. Meanwhile, the war economy may also require costs and rationing: former Soviet sins. Although the threat of a monetary turn of destiny increases, the in danger of Russia is about to raise serious restrictions In the serious restrictions on the Putin War.
The immediate fall of the Russian wealth fund is partly due to Western sanctions, which have prevented Russia from becoming straightened with other countries. The country’s external debt has collapsed in the last decade, with an external indebtedness of 729 billion dollars in 2023 to around 293 billion dollars in September 2024, åslund said.
Russia’s limited ability to finance the war also spells bad news for the health of its economy, which is plagued by a myriad of other issues.
Åslund pointed to soaring inflation, the declining value of Russia’s currency, and a severe shortage of workers in the nation, all factors that economists have warned could crimp Russia’s long-run growth prospects.
Russian President Vladimir Putin boasts about the strength of his country’s economy, saying that Western sanctions are only becoming more powerful (while at the same time not easily being lifted). coming to Russia,” Åslund said.
Other experts have also issued grim forecasts for Russia’s economy, with some noting that economic weakness could interfere with Russia’s ability to continue its war. Renaud Foucart, another European economist, said last year that Moscow didn’t look like it could afford to either win or lose the war.
The Atlantic Council recently said Russia’s economic problems could force an end to its conflict with Ukraine in 2025.
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