Russia's wealth fund depletes rapidly Threatening Military Efforts in 2025

In its article, Business Insider highlights that Russia is facing a critical financial challenge as its wealth fund rapidly depletes, threatening to undermine its war efforts in 2025. 

Russia is confronting a major obstacle to its war efforts in 2025, as it is rapidly depleting its financial resources. According to forecasts from a European economist, the country's financial reserves may be exhausted before the year’s end.

Anders Åslund, a Swedish economist and former fellow at the Atlantic Council, believes that Russia's National Wealth Fund could run out of liquid reserves by the fall of this year. 

This poses a significant challenge for the country's military operations in 2025, he explained, as Russia has heavily depended on the wealth fund in recent years.

Åslund noted that liquid reserves in the wealth fund have been reduced from $117 billion in 2021 to $31 billion by the end of November.

However, according to Russia's 2025 budget, the country is set to allocate a record $130.5 billion for defense this year.

"The most critical shortage, however, is budget financing, as Russia's last liquid reserves are likely to run out in the fall of 2025," Åslund wrote in an op-ed for Project Syndicate on Tuesday. "Budget cuts will then become necessary. In the meantime, the war economy might also require price controls and rationing — the old Soviet sins. As the risk of a financial crash rises, Russia's imperiled economy is about to pose serious constraints on Putin's war."

The sharp decline in Russia's wealth fund has been partly caused by Western sanctions, which have blocked Russia from borrowing from other nations. Åslund pointed out that the country's total foreign debt has dropped significantly over the past decade, with foreign borrowing falling from $729 billion in 2023 to approximately $293 billion by September 2024.

Russia's limited capacity to fund the war also signals trouble for the health of its economy, which is burdened by numerous other challenges. Åslund highlighted factors such as soaring inflation, the weakening value of Russia's currency, and a severe labor shortage, all of which economists warn could hinder Russia's long-term economic growth.

By Naila Huseynova