Problem Loans Are Leading russia’s Economy to Collapse

The government of the rf has effectively acknowledged the high probability of a banking crisis and a crisis of non-payments in the corporate sector. The combination of risks is systemic in nature and indicates not a cyclical slowdown, but the economy’s inevitable entry into a phase of debt collapse.

The hidden growth of problem debt remains the key factor. Taking into account restructured loans, the real volume of problem debt exceeds 11% and reaches about $131 billion. This is significantly higher than the 2-4% level considered safe for the stability of the banking system and has long crossed the 5% threshold, signaling an increased risk. In international practice, a figure of 10% or more is considered pre-crisis or crisis. The accumulation of liabilities creates conditions for a full-blown crisis of non-performing loans in the third–fourth quarters of 2026.

In parallel, the cost of servicing debt is rising rapidly. In 2024, russian companies paid banks $145 billion in interest, by 83% more than in 2023. In the first half of 2025, this figure rose by another 54% year-on-year and reached $95 billion. By the end of the third quarter of 2025, every fourth company with loans had defaulted on its payments. The number of legal entities with overdue debts rose to 165,000, which is by 41,000 more than at the beginning of 2025 and by 100,000 more than in 2022.

Debt problems are concentrated in the basic sectors of the economy. In 2025, companies in the mining, metallurgical, and oil and gas sectors, as well as state-owned corporations in the transport industry, need restructuring. In particular, the “RZhD” recorded a net loss for the first time in five years and requested debt restructuring in the amount of approximately $50 billion.

Defense lending remains a separate source of systemic risk. In 2022–2024, defense companies had been granted loans totaling approximately $202 billion. These liabilities, concentrated in the banking system, have limited transparency, and can quickly transform into non-performing assets.

Taken together, these factors point to a structural deterioration in the financial model of russia’s economy, where debt burdens and state-backed lending have displaced market sources of growth. In the absence of large-scale recapitalization of the banking system or a mechanism for transferring non-performing corporate debt to the federal budget, a crisis scenario seems almost inevitable, with mass corporate defaults and a subsequent explosive growth in non-performing assets in banks.