Russian fiscal space – In-depth analysis of Russian public debt, constraints to medium-term sustainability, and macroeconomic consequences

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4 Feb 2026

Fiscal Policies and Growth

Marek Dabrowski

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Marek Dabrowski
Expertise:  Background: Current Positions: Previous Positions: Visiting Professor, Central European University, Vienna (2023 – 2024) Dr Marek Dabrowski is a Non-Resident Scholar at Bruegel, Brussels, and Fellow at CASE – Center for Social and Economic Research in Warsaw. He was a co founder of CASE (1991), former Chairman of its Supervisory Council and President of … <a href="https://case-research.eu/publications/russian-fiscal-space-in-depth-analysis-of-russian-public-debt-constraints-to-medium-term-sustainability-and-macroeconomic-consequences/">Continued</a>

Articles from this author:
- Future outlook of EU-Moldova trade and investment relations
  This study explores the evolution and prospects of economic relations between the European Union and the Republic of Moldova.
- Eastern European Economies Amidst Global and Regional Shocks
  This report examines the economic and geopolitical challenges in the EU's Eastern neighbourhood. It analyzes macroeconomic stability, financial resilience, trade, and energy security, offering policy recommendations for regional stability and growth.
- 172nd mBank-CASE Seminar Proceedings: The growing public debt and the associated risks
  The mBank-CASE Seminar Proceedings No. 172 “The growing public debt and the associated risks” consists of two articles: “The increasing risk of sovereign insolvency and a new global financial crisis in the post-COVID-19 era” authored by Marek Dąbrowski, and “Will Poland fall into the debt trap?” authored by Jakub Karnowski and Marek Rzońca. … Continued
Author’s articles

This publication examines how much fiscal room Russia still has under wartime conditions. It focuses on public finances, debt, inflation, and the broader macroeconomic effects of the war in Ukraine and Western sanctions.

The report finds that Russia’s economy showed unexpected resilience in 2022–2024. Output recovered quickly after an initial shock, and headline fiscal indicators such as the budget deficit and public debt remained relatively low. This performance was supported by high oil prices, strict capital controls, and large increases in war-related public spending. At the same time, the study shows that underlying pressures have been building. Inflation has stayed well above the central bank’s target despite very high interest rates. Economic growth in 2023–2024 was driven mainly by military demand and a credit boom, which led to overheating and capacity constraints. Fiscal pressures have increased not only through direct military spending but also through quasi-fiscal operations carried out via state banks, state-owned enterprises, and the National Wealth Fund.

The analysis highlights that Russia still has some short-term fiscal space. It can draw on remaining liquid assets in the National Wealth Fund, expand domestic borrowing, and raise non-hydrocarbon taxes. However, these options are limited. Borrowing costs are high, reserves are less liquid than before, and the tax base outside oil and gas is constrained.

Overall, the report concludes that Russia can continue financing the war in the near term, especially if oil prices remain favorable. But its fiscal position is gradually deteriorating. Over the medium term, rising war costs, persistent inflation, and hidden fiscal liabilities pose growing risks to macroeconomic and financial stability.

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Russian fiscal space – In-depth analysis of Russian public debt, constraints to medium-term sustainability, and macroeconomic consequences

Marek Dabrowski

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Russian fiscal space – In-depth analysis of Russian public debt, constraints to medium-term sustainability, and macroeconomic consequences

Marek Dabrowski

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