Overview
- The State Duma on Nov. 18 approved a budget that lifts VAT to 22% from Jan. 1, 2026, tightens business tax rules and raises fines, while directing record spending to defense and cutting investment and health projects.
- Finance Minister Anton Siluanov argued tax hikes are preferable to additional debt, warning new borrowing would stoke inflation and prompt further interest-rate increases.
- Corporate debt stress is acute, with September interest payments equal to 39% of profits before interest and tax, according to the Center for Macroeconomic Analysis and Short-Term Forecasting.
- Rosstat data show net corporate profits fell 8.3% year over year in January–August 2025 and the share of loss-making firms rose to 30.4%, the highest since 2020.
- Economic momentum has faded, with third-quarter output near zero and the 2025 deficit revised to roughly 2.6% after weaker oil receipts, sanctions and attacks on energy infrastructure.