Last year, Russia spent almost a quarter of the National Welfare Fund reserves to maintain the economy on war footing and finance the war in Ukraine, Bloomberg reports..

According to the Ministry of Finance, in 2024 the National Welfare Fund remained almost unchanged and amounted to about 12 trillion rubles ($117 billion). At the same time, liquid assets - cash reserves and investments - as of January 1, compared to the beginning of last year, decreased by 24% to 3.8 trillion rubles.

Since the beginning of 2022, when dictator Vladimir Putin ordered a full-scale invasion of Ukraine, the Fund has shrunk by 57% from 8.9 trillion rubles.

The national treasury is under pressure due to increased budgetary expenditures related to the needs of the military. While revenues from oil and gas exports over the past year exceeded government forecasts, the Ministry of Finance spent 1.3 trillion rubles from the welfare fund to cover the budget deficit.

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Reserves were also used for measures to support the Russian economy due to sanctions imposed by the United States and allies, as well as to finance large infrastructure projects.

The value of government bonds issued to finance such projects has risen 50% in 2024 and quadrupled since the start of 2022, according to Bloomberg News calculations.. The value of the fund’s shares in Russian companies has increased by 44% over the past three years..

A report published in October by the Russian Central Bank warned of the risk of the National Welfare Fund being completely depleted by 2025 in the event of a “significant deterioration in external conditions” and a fall in oil prices..

Previously, the IMF predicted that the dynamics of the contraction of the Russian economy will be stable - from 3% at the end of 2023 to 2.6% in 2024. The worst situation will occur in 2025, when the GDP growth rate will be the lowest in a long period of observation – 1.1%.

The United States does not rule out that they may discuss lifting sanctions from Russia during negotiations to end the war in Ukraine.

This was stated by Senator Marco Rubio during a hearing in the Senate to confirm his candidacy for the post of head of the State Department..

The Russian economy is already in a deep crisis. Sanctions multiplied by time have done their job. Will the Kremlin be able to continue financing the 2025 war Does he have enough resources for this And what does it depend on?

Ilya Neskhodovsky, an expert on economic issues (Network for the Protection of National Interests ANTS), writes about this in the article “The Russian economy is Putin’s Achilles heel.”.