MOSCOW, April 27 - Russia’s regional finances are heading toward a markedly larger shortfall, with the combined deficit projected to expand by 27% to 1.9 trillion roubles ($25.4 billion) in 2026, Finance Minister Anton Siluanov said on Monday.
Siluanov attributed the deterioration chiefly to weaker receipts from the corporate profit tax and to an increase in social spending. He noted that regional budgets carry a significant portion of expenditures tied to the war in Ukraine, including payments to war volunteers and their families.
Federal reserves mask regional strain
Russian officials have pointed to the federal budget’s relatively moderate deficit and debt position, supported by the National Wealth Fund, as a buffer against external pressure. However, Siluanov cautioned that a broader assessment that incorporates regional balances reveals a less robust fiscal picture.
Profit tax receipts and corporate profits
Profit tax revenues - which can represent as much as one-third of total regional budget income - have weakened amid the country’s economic slowdown that began in 2025. The latest data available for January showed corporate profits fell by almost 30% year-on-year, with many companies reporting lower profits or losses.
"The situation with the regions’ budgets is challenging,"Siluanov told a hearing at the Federation Council, the upper house of parliament. He added that the largest deficits have emerged in regions that had historically run surpluses.
Siluanov said regional debt as a share of revenues rose by one percentage point to 19% in 2025, noting that regions have been financing gaps with bank loans taken at currently high interest rates.
"Our task is to minimize commercial debt. Today, it is costly,"he said.
Federal response and outlook
The Finance Ministry is collaborating with regional authorities on measures to trim spending and bolster revenues. Siluanov reported a goal of nearly halving the expected combined deficit to 1 trillion roubles through those efforts. He described up to 20 regions - more than one-fifth of all Russian regions - as problematic, without naming them.
($1 = 74.9000 roubles)