Economy
Is Russia on the Verge of a Financial Crisis? Business Is Almost as Pessimistic as During the Pandemic
February 11, 2026
- Maxim BlantEconomic commentator, Radio Free Europe/Radio Liberty
Against the backdrop of persistent inflation and a widening budget deficit, Russia’s economic challenges are multiplying, including a budding banking crisis, mass debt repayment problems and worsening sentiment among businesses, particularly in the industrial sector, notes economic analyst Maxim Blant.
This is a translated and abridged version of an article originally published by Republic.
A measure of sentiment in the Russian industrial sector has been in negative territory since end-2024. In January 2026, pessimism approached levels seen during the pandemic panic in 2020. A crisis of a “moderate scale” has been identified in the banking system, while a debt crisis is gaining steam simultaneously.
All this is unfolding against the backdrop of high inflation, taming which remains the Central Bank’s top priority, as well as a large budget deficit that is forcing the government to look for additional sources of revenue and put off systemic support measures. Overall, there is little reason to expect that the economy will manage to avoid an acute general crisis.
A measure of sentiment in the Russian industrial sector has been in negative territory since end-2024. In January 2026, pessimism approached levels seen during the pandemic panic in 2020. A crisis of a “moderate scale” has been identified in the banking system, while a debt crisis is gaining steam simultaneously.
All this is unfolding against the backdrop of high inflation, taming which remains the Central Bank’s top priority, as well as a large budget deficit that is forcing the government to look for additional sources of revenue and put off systemic support measures. Overall, there is little reason to expect that the economy will manage to avoid an acute general crisis.
Vardan Papikyan / Unsplash
‘Moderate’ banking crisis
In late January and early February, several analytical reports and leading indicator prints based on surveys of Russian corporate executives were released. Taken together, they point to a far from favorable situation. The most categorical in its assessments was the Center for Macroeconomic Analysis and Short-term Forecasting (CMASF), a think tank closely aligned with the government.
On February 2, CMASF published a report titled “What do leading indicators of systemic financial and macroeconomic risks show?” It is important because it includes the latest data, from January. The authors state at the outset: “the banking crisis previously predicted by our early-warning system for macro-financial risks has now been confirmed, according to the formal criteria of a banking crisis (and a little earlier, according to formal criteria, a ‘bad debt’ crisis had already been recorded). However, both crises are moderate in scale: just over 10% of banks’ total assets and loan portfolios are bad (though in certain segments the ‘depth of the damage’ may be greater – for example, the figure for SME loans was around 19% on average).”
When bad debt exceeds 10% of total loans in the banking system, it is considered a crisis. This conclusion is supported by the Central Bank’s latest “Russian Banking Sector Development” report, released in February, which found that the share of problem corporate loans rose to 11% as of end-2025 and unsecured consumer lending to 13%.
Analysts describe the brewing banking crisis as “latent,” but it could take on more serious proportions. The key precondition would be a sharp deterioration in the quality of banks’ loan portfolios. A particular concern in that regard is loans to exporters, above all in the oil and gas and metals and mining sectors.
Debt levels rising, repayment costs going up
Sanctions, combined with a crackdown on Russia’s “shadow fleet” and the resulting record discounts on Russian oil, are weighing not only on Russian federal budget revenues but also on the financial stability of Russian oil companies. Their revenues are declining, while costs are rising on the back of a strong ruble, Ukrainian strikes on energy infrastructure and higher expenses for circumventing sanctions. Serving as a checkbook and economic driver for the government and being a stable source of orders for metallurgists, machine building and other industries, the oil and gas sector is increasingly becoming a source of risk for the banking system.
There are no clear signs of improvement in the economy. On the contrary, it is stagnating, and small and medium-sized businesses – already struggling with high borrowing costs – are now facing mounting tax bills. Thus, their situation is unlikely to see improvement. Meanwhile, large borrowers are an even greater source of concern – one voiced not only by analysts but also by the Central Bank, which has warned that starting March 1, it will tighten lending rules for large companies with high debt loads, a category that today includes most major borrowers. When issuing new loans to these companies, banks will be required to set aside additional reserves, which will inevitably push interest rates higher.
This tightening is unlikely to strengthen the financial position of corporate borrowers. Nor do global or domestic economic conditions suggest the possibility of sudden windfalls for large companies. The point when a “weak link,” capable of destabilizing an already-strained banking system, will give way thus appears to be only a matter of time. In such a scenario, a bank run cannot be ruled out, with the current latent crisis, already reflected by formal indicators, escalating into a full-blown financial maelstrom that would make the 2008-09 downturn look like a favorable scenario.
CMASF, for its part, warns that its “early-warning system” points to a high probability of a bank run. These assessments ought to be given attention not only because of the CMASF’s close ties to the government but also because its models and leading indicators have previously proven effective. As early as late 2024, for example, it warned of a heightened risk of a debt crisis.
In late January and early February, several analytical reports and leading indicator prints based on surveys of Russian corporate executives were released. Taken together, they point to a far from favorable situation. The most categorical in its assessments was the Center for Macroeconomic Analysis and Short-term Forecasting (CMASF), a think tank closely aligned with the government.
On February 2, CMASF published a report titled “What do leading indicators of systemic financial and macroeconomic risks show?” It is important because it includes the latest data, from January. The authors state at the outset: “the banking crisis previously predicted by our early-warning system for macro-financial risks has now been confirmed, according to the formal criteria of a banking crisis (and a little earlier, according to formal criteria, a ‘bad debt’ crisis had already been recorded). However, both crises are moderate in scale: just over 10% of banks’ total assets and loan portfolios are bad (though in certain segments the ‘depth of the damage’ may be greater – for example, the figure for SME loans was around 19% on average).”
When bad debt exceeds 10% of total loans in the banking system, it is considered a crisis. This conclusion is supported by the Central Bank’s latest “Russian Banking Sector Development” report, released in February, which found that the share of problem corporate loans rose to 11% as of end-2025 and unsecured consumer lending to 13%.
Analysts describe the brewing banking crisis as “latent,” but it could take on more serious proportions. The key precondition would be a sharp deterioration in the quality of banks’ loan portfolios. A particular concern in that regard is loans to exporters, above all in the oil and gas and metals and mining sectors.
Debt levels rising, repayment costs going up
Sanctions, combined with a crackdown on Russia’s “shadow fleet” and the resulting record discounts on Russian oil, are weighing not only on Russian federal budget revenues but also on the financial stability of Russian oil companies. Their revenues are declining, while costs are rising on the back of a strong ruble, Ukrainian strikes on energy infrastructure and higher expenses for circumventing sanctions. Serving as a checkbook and economic driver for the government and being a stable source of orders for metallurgists, machine building and other industries, the oil and gas sector is increasingly becoming a source of risk for the banking system.
There are no clear signs of improvement in the economy. On the contrary, it is stagnating, and small and medium-sized businesses – already struggling with high borrowing costs – are now facing mounting tax bills. Thus, their situation is unlikely to see improvement. Meanwhile, large borrowers are an even greater source of concern – one voiced not only by analysts but also by the Central Bank, which has warned that starting March 1, it will tighten lending rules for large companies with high debt loads, a category that today includes most major borrowers. When issuing new loans to these companies, banks will be required to set aside additional reserves, which will inevitably push interest rates higher.
This tightening is unlikely to strengthen the financial position of corporate borrowers. Nor do global or domestic economic conditions suggest the possibility of sudden windfalls for large companies. The point when a “weak link,” capable of destabilizing an already-strained banking system, will give way thus appears to be only a matter of time. In such a scenario, a bank run cannot be ruled out, with the current latent crisis, already reflected by formal indicators, escalating into a full-blown financial maelstrom that would make the 2008-09 downturn look like a favorable scenario.
CMASF, for its part, warns that its “early-warning system” points to a high probability of a bank run. These assessments ought to be given attention not only because of the CMASF’s close ties to the government but also because its models and leading indicators have previously proven effective. As early as late 2024, for example, it warned of a heightened risk of a debt crisis.
Platon Matakaev / Unsplash
Gloomy business sentiment
Recently, the Russian Union of Industrialists and Entrepreneurs released a new survey of corporate executives, who named nonpayment by counterparties as the main constraint on their operations. In the survey for the first quarter of 2025, just over a quarter of respondents cited that; now, the figure has risen to 42%. This, combined with falling demand – named the second-biggest constraint – makes the picture clearer: Russian businesses are heavily indebted, lack the resources to service their loans and even pay for goods and services already received, and see no prospects for growing sales.
These findings are corroborated by the abovementioned January industrial-sector sentiment index, calculated by the Institute of Economic Forecasting at the Russian Academy of Sciences (IEF RAS). Also based on surveys of industrial managers, it has remained in negative territory for 14 consecutive months. In January, the pessimism approached lows last seen during the pandemic in 2020, when businesses were gripped by panic as widespread quarantine restrictions were rolled out. The IEF RAS index is based solely on provided assessments of demand, inventory and production plans and does not incorporate data on payment/nonpayment. On demand fewer than a third of companies (31%) are upbeat – the weakest reading since 2008-09. The consequences are predictable: investment started declining last year.
Not only investment demand but also consumer demand has weakened sharply, particularly for cars and other durable goods – categories that many Russian households typically purchase on credit.
A key difference between the current situation and previous crises is the absence of discussions about systemic support measures. On the contrary, the Central Bank has maintained its tight monetary policy to fight inflation, which is being fanned by military spending. The government is raising taxes, scaling back tax preferences, curtailing “preferential lending” programs for certain sectors and trimming investment plans for state-owned companies and infrastructure projects. All this is justified by the need to reduce fiscal stimulus to the economy so the Central Bank can lower its key rate, making borrowing more affordable and reviving demand and investment.
No one has taken such mantras seriously for a while now. Everything hinges on an irrational hope that everything will magically change: the war will end, sanctions will be repealed, oil prices will go up and the ruble will weaken. Meanwhile, the current “latent” crisis, rapidly gaining steam, is threatening to become acute.
Recently, the Russian Union of Industrialists and Entrepreneurs released a new survey of corporate executives, who named nonpayment by counterparties as the main constraint on their operations. In the survey for the first quarter of 2025, just over a quarter of respondents cited that; now, the figure has risen to 42%. This, combined with falling demand – named the second-biggest constraint – makes the picture clearer: Russian businesses are heavily indebted, lack the resources to service their loans and even pay for goods and services already received, and see no prospects for growing sales.
These findings are corroborated by the abovementioned January industrial-sector sentiment index, calculated by the Institute of Economic Forecasting at the Russian Academy of Sciences (IEF RAS). Also based on surveys of industrial managers, it has remained in negative territory for 14 consecutive months. In January, the pessimism approached lows last seen during the pandemic in 2020, when businesses were gripped by panic as widespread quarantine restrictions were rolled out. The IEF RAS index is based solely on provided assessments of demand, inventory and production plans and does not incorporate data on payment/nonpayment. On demand fewer than a third of companies (31%) are upbeat – the weakest reading since 2008-09. The consequences are predictable: investment started declining last year.
Not only investment demand but also consumer demand has weakened sharply, particularly for cars and other durable goods – categories that many Russian households typically purchase on credit.
A key difference between the current situation and previous crises is the absence of discussions about systemic support measures. On the contrary, the Central Bank has maintained its tight monetary policy to fight inflation, which is being fanned by military spending. The government is raising taxes, scaling back tax preferences, curtailing “preferential lending” programs for certain sectors and trimming investment plans for state-owned companies and infrastructure projects. All this is justified by the need to reduce fiscal stimulus to the economy so the Central Bank can lower its key rate, making borrowing more affordable and reviving demand and investment.
No one has taken such mantras seriously for a while now. Everything hinges on an irrational hope that everything will magically change: the war will end, sanctions will be repealed, oil prices will go up and the ruble will weaken. Meanwhile, the current “latent” crisis, rapidly gaining steam, is threatening to become acute.
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