Russia's Economic Support for Businesses Faces Major Cutbacks Amid Fiscal Strain

• •Russia's government will reduce new financial support for businesses amid fiscal constraints.
• •The federal deficit reached 5.6 trillion rubles in 2024, indicating severe budget pressures.
• •Businesses must adapt to a labor shortage and rising costs as internal reserves are depleted.

Russia's Economic Development Minister Maxim Reshetnikov announced a significant reduction in government support for businesses due to mounting fiscal pressures. Existing commitments will be honored, but new subsidies and concessional loans will be limited. The economic landscape has shifted, with a slowing growth rate of just 1% in 2025 and a federal deficit reaching 5.6 trillion rubles in 2024. The Central Bank has indicated that liquid assets in the National Wealth Fund have dropped significantly, and high oil revenues are being redirected towards debt repayment rather than new lending. Businesses are now expected to rely more on their internal resources as external support diminishes. The labor market is also tightening, with unemployment at a record low of 2.1%. Reshetnikov emphasized the need for businesses to adapt to these challenges, including rising costs and productivity pressures.