Ilya Sokolov, Senior Researcher at the Gaidar Institute, warned of the risks of rapid growth in public debt amid high interest rates in an article in Nezavisimaya Gazeta on the draft federal budget for 2027–2029.
The publication cites the Gaidar Institute’s report “Draft Federal Budget for 2027–2029: Priorities Remain Unchanged”. One of the key questions is how the government plans to cover the budget deficit and what consequences increased borrowing will have.
According to Ilya Sokolov’s assessment, Russia’s public debt will exceed 20% of GDP as early as 2027. In and of itself, this level is not yet high compared to that of most developed countries; however, it is important to note that the government is forced to borrow under conditions of high interest rates. This means that servicing the debt will be costly for the budget over the long term.
“Even if Russia’s public debt remains relatively small by international standards, its rapid growth warrants attention. With high interest rates, new borrowing is expensive, which means the government is effectively locking in significant debt-service costs for years to come. This approach allows for the temporary coverage of the budget deficit but does not address the root causes of the deficit,” notes Ilya Sokolov.
The report also examines the impact of fiscal policy on economic growth. According to the expert, increasing the tax burden on businesses and the public while restraining government spending effectively leaves the task of stimulating the economy to monetary policy and the Bank of Russia.
The full text of the report is available at this link.