Is Russia close to bankruptcy?

Introduction

Kremlin Index

Russia experienced a serious economic and political crisis in 2022, which was largely brought on by its invasion of Ukraine. The international community, particularly the US and the EU, responded to this conduct with severe penalties, which significantly harmed the economy. The fragile status of the Russian economy and the morale of its soldiers come into greater focus as the frost of the long winter months approaches.

Events

The consequences of Russia's activities in Ukraine have been disastrous economically. According to the World Bank, Russia's GDP shrank by roughly 10% in 2022 as a result of the harsh sanctions imposed by the West. Another victim was the Russian ruble, which lost more than 40% of its value against the US dollar. Russia is now financially insecure because its foreign reserves have substantially decreased from $600 billion in 2019 to $300 billion in 2022. At the same time, Russia's jobless rate increased dramatically from 4.6% in 2019 to 10% in 2022. These numbers, however, do not accurately reflect the situation; according to some analysts, it may actually be much worse. Many Russians have fallen into poverty as a result of the economic crisis, and there are now more frequent shortages of food, medicine, and heating. Russia's financial situation has worsened as a result of the military operation in Ukraine. Russia's forces are expected to confront more difficulties as winter approaches after an expensive and ineffective military operation. The morale of Russian soldiers is anticipated to deteriorate due to logistical challenges and impending supply shortages, which could result in increasing rates of desertion and defection.

Facts

Russia is on the verge of bankruptcy as we learn more about the country's fiscal problems. Russia made a sovereign debt default on its foreign currency obligations for the first time since 1918. The country owes foreign creditors $40 billion in total, mostly in the form of eurobonds, but has been unable to pay them back because of the sanctions that have closed off payment methods. Sales of defense equipment have been a major source of income for Russia, but it is still unclear whether these sales will be enough to keep the government solvent. These sales could be severely restricted by the current circumstances, significantly straining Russia's coffers. Additionally, Russia's GDP growth has been severely constrained. The economy has shrunk by about 10% in 2022 as a result of international sanctions and a fall in local economic activity.

Conclusion

Bankruptcy?

Russia is on the verge of bankruptcy as a result of the Ukraine crisis, which has also caused domestic turmoil, debt defaults, and isolation on the global stage. Even while China, Russia's main ally, has also felt the strain, it has taken advantage of Russia's weakness to increase its influence in the Russian Far East. The financial crisis has been made worse by Russia's asset seizures, its $40 billion in debt, and its defaulted eurobonds. Since the invasion of Ukraine, $330 billion in assets have been frozen abroad, reducing Russia's financial leverage. Therefore, Russia's participation in Ukraine could be a costly error, possibly leading to the overthrow of Putin's government and changing Russia's destiny.

War can deplete ?