Russia’s wartime borrowing boom, which helped prop up the economy following Western sanctions, has left the country’s banking sector increasingly vulnerable as high interest rates and slowing growth make it harder for companies and households to repay their debts.
Since 2022, the government has aggressively rolled out subsidized lending programs, either as newly introduced measures or expanded emergency schemes left over from the Covid-19 pandemic. They have helped underwrite not only defense-related industries but also agriculture, small businesses and factories seeking to replace lost Western suppliers and expand production.
At the same time, officials have encouraged Russians to borrow more, including by expanding subsidized family mortgage schemes, which helped buyers afford increasingly expensive homes.
As a result, Russian corporate debt has grown by 93% since 2021, while household debt has risen by 57% over the same period.
That accumulation of debt is now turning into a systemic pressure point as high interest rates make servicing loans more expensive and recent tax hikes squeeze corporate profits.
