Russia’s regions are on the brink of a financial crisis as declining tax revenues coupled with rising expenditures have compelled local authorities to deplete nearly all their financial reserves, according to an analysis by the Expert RA rating agency.
As of September 1, at least six regions were reported to have only two to three days’ worth of expenses remaining in their accounts.
The Arkhangelsk region, which has a population of around 1 million, held a mere 50 million rubles ($620,000) in reserves, a tiny fraction at 0.03% of its annual budget of 156 billion rubles ($1.93 billion).
In Kalmykia, the remaining 40 million rubles ($496,000) represented just 0.1% of its yearly budget.
Meanwhile, the Volgograd region’s reserves dwindled to 100 million rubles ($1.24 million), making up only 0.04% of its annual budget of 196 billion rubles ($2.43 billion).
The Belgorod region reported having only 200 million rubles ($2.48 million) left, or 0.1% of its budget, which stands at 184 billion rubles ($2.28 billion).
Ulyanovsk and Irkutsk regions had 500 million rubles ($6.2 million) and 900 million rubles ($11.16 million) in reserve, respectively, enough to fund only one to two days’ worth of expenditures.
Murmansk also saw its reserves dip below 1 billion rubles ($12.4 million), constituting roughly 0.7% of its annual budget and sufficient for about two days’ worth of spending.
In contrast, larger regions such as Novosibirsk, Tula, and Yaroslavl could cover about five days of expenses, with remaining balances of 5.2 billion rubles ($64.48 million), 2.3 billion rubles ($28.52 million), and 2.1 billion rubles ($26.04 million), respectively.
Collectively, regional budgets recorded a deficit of 397.8 billion rubles ($4.93 billion) in the first half of 2025, a figure that soared to 724.8 billion rubles ($8.99 billion) by the end of September.
One-third of the regions experienced nominal declines in revenue, while adjusted for inflation, 53 of Russia’s 89 federal subjects (including the annexed Crimea and four partially occupied regions of Ukraine) saw a drop in income.
Overall, 67 regions ended the first half of the year with negative balances.
The most significant deficits were observed in Kemerovo (34% of revenues), Arkhangelsk (31%), Komi (30%), Murmansk (28%), Vologda (25%), and Irkutsk (24.6%), according to economist Natalia Zubarevich.
In response, the Irkutsk region has begun to cut back on spending, announcing a reduction of 4.9 billion rubles ($60.76 million) in its education and healthcare budgets in September.
Teachers have faced salary reductions in twelve regions, while local governments in Yaroslavl, Ulyanovsk, and Dagestan are contemplating tax hikes for small businesses to mitigate their deficits.
In the Orenburg, Novosibirsk, and Krasnoyarsk regions, lawmakers have introduced proposals to increase vehicle taxes.
“The state of regional budgets is critical and is expected to deteriorate further by the end of the year,” warned Zubarevich, noting that an increase in government contract payments in December will exacerbate the shortfall.
The Finance Ministry projects that regional expenditures will surpass revenues by 370 billion rubles ($4.59 billion) in December, with an additional deficit of 300 billion rubles ($3.72 billion) forecasted for the following year.
