(MOSCOW) – The Central Bank of the Russian Federation has become the world’s largest seller of gold reserves, according to the World Gold Council. The move signals severe economic strain as the Kremlin struggles to finance its war in Ukraine and cover mounting federal and regional budget deficits.
Analysis from German intelligence and various Russian economists indicates the federal budget deficit has already exceeded 8.3 trillion rubles, approximately $92.3 billion or £72.1 billion. Regional budget deficits total a further two trillion rubles, approximately $22.2 billion or £17.4 billion.
The scale of the deficits has left many civilian sectors unable to pay salaries. Basic services are suffering across the country. Out of 83 Russian federal subjects, 56 regions now report budget deficits. This compares to just six regions in 2022, before the full scale invasion of Ukraine.
The amount of gold sold by Moscow during the first seven months of 2026 exceeds the amount sold in 1998, the year the Kremlin announced a sovereign default. More than 50 tons of gold have been liquidated from state reserves.
The Russian dictator Vladimir Putin is accused of prioritising the destruction of Ukraine over domestic stability, security, and investment. Regional economies are deteriorating rapidly. The coal mining region of Kuzbas, once a symbol of Soviet progress, is now reportedly begging the Kremlin for financial support and receiving denials.
Of the 56 regions reporting deficits, 35 face shortfalls larger than 10 per cent of their revenue. Economists note that selling state reserves is a clear indicator of financial distress. The former Russian finance minister who announced the 1998 default, Mikhail Zadornov, has predicted the collapse of the Russian economy.
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