Putin’s war hits Russia’s budget, mass business closures expected - CPD
Russian leader Vladimir Putin and Russian military personnel (Photo: Getty Images)
In Russia, preparations are underway for a large-scale wave of closures among small and medium-sized businesses. The cause is a budget crisis triggered by the war, according to the Telegram channel of the Center for Countering Disinformation.
The agency reported that amid VAT increases and restricted access to the simplified taxation system, financial analysts forecast that up to 30% of companies in the small and medium business sector could close.
“Seeking ways to replenish the deficit budget, the Putin government is playing an extremely dangerous game. In the short term, there may indeed be additional tax revenue, but ultimately the state will lose far more: businesses that close pay no taxes at all,” the statement said.
The Center for Countering Disinformation (CCD) added that amid rising war expenditures and economic stagnation, the Kremlin once again chooses the easiest path: shifting the financial burden onto citizens and businesses.
“While propaganda talks about how Russia is ‘resilient under sanctions’ and paints a picture of a ‘Putin economic miracle,’ in reality, the economy is increasingly exhausted,” the CCD summarized.
Decline of Russia’s economy
A week ago, the Ukrainian Foreign Intelligence Service reported that in 2026, the Russian economy is entering a phase of ‘expensive money,’ which is becoming the new norm amid the war against Ukraine and prolonged macroeconomic instability.
This means that Russian companies will have to reassess project payback periods, payment deferral conditions, and the real cost of borrowing.
Additionally, the International Monetary Fund lowered its forecast for Russia’s economic growth in 2026 by 0.2 percentage points. The new preliminary growth estimate is 0.8%.
According to the Ukrainian Foreign Intelligence Service, the scale of nationalization in Russia in 2025 broke all previous records. This indicates further contraction of market mechanisms and stronger state control over the economy.
We also reported that Russia ended 2025 with catastrophic economic indicators. Notably, oil prices fell to $40 per barrel, and the space industry regressed to 1961 levels.
