Ukraine

Russian banks have no spare ruble liquidity to buy the government bonds used to finance the federal budget deficit, a senior Sberbank executive said, raising questions about Moscow’s ability to cover rising wartime spending through domestic borrowing.

The warning comes as the Finance Ministry faces a widening budget shortfall and may need trillions of rubles in additional borrowing this year. With banks increasingly short of liquidity and government bond auctions suspended, the Central Bank may face growing pressure to provide the funds needed to keep debt purchases flowing.

Taras Skvortsov, Sberbank’s vice president and chief financial officer, said cash withdrawals from the banking system had reached about 2 trillion rubles ($25.2 billion) since the start of the year, creating a liquidity shortage.

“Today, banks have only enough funds to lend to customers — that is their core business,” Skvortsov was quoted as saying by Reuters. “You can buy OFZ bonds, especially without a significant premium, when you have spare liquidity and are confident that it will remain available. Today, the situation is the opposite.”

OFZs are ruble-denominated government bonds issued by the Finance Ministry to finance state spending.

The federal budget recorded a deficit of 5.7 trillion rubles ($71.82 billion) in the first half of 2026 amid higher-than-planned defense spending.

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