russia Is Increasing Its Financing to  the Global South, While a Third of Its Citizens Cannot Afford Food

russia has sharply increased external lending, despite deepening budget problems and stagnant domestic demand. Over the past year, moscow has increased its financing to Bangladesh, India, and Egypt by a total of $3 billion: Bangladesh’s debt has grown by $1.3 billion, India’s – by $800 million, and Egypt’s – by the same amount. Belarus’ debt to russia has reached $7.6 billion. At the same time, the kremlin is expanding its debt write-off practice: Tajikistan has had $300 million written off, Cuba has been granted a deferral on a EUR 1.2 billion loan, belarus has received a deferral for 7–12 years, Guinea-Bissau has had $26.7 million written off and another $940,000 restructured, and Somalia has been allowed not to repay $691 million. In total, moscow has “forgiven” African countries about $20 billion.

The contrast with the domestic situation is becoming increasingly stark. russian consumers are cutting back on basic purchases: 58 % are saving on goods they used to buy, 57 % are switching to cheaper alternatives, and 46 % are trying to go to shops as seldom as possible. The share of citizens who do not have enough money for food remains stable – 31 %. Meanwhile, the government is not fulfilling its plan to collect key taxes: at the end of the year, the federal budget will be short of 5 trillion rubles in seven main items, which provide half of the treasury’s revenues.

Despite this, the kremlin is increasing military spending to record levels. 12.93 trillion rubles, almost 30 % of the budget, will be allocated to the army and armaments – the highest since the soviet era. Another 3.91 trillion will go to “national security”. Security forces will receive a total of 16.84 trillion rubles, or 38 % of the budget, which is 1.6 times more than in 2021.

The price of this priority is clear: social spending will be cut to 25.1 % from 38.1 % before the war, and supporting the economy – to 10.9 % from 17.6%. Both indicators will fall to their lowest levels in 20 years.

While millions of russians are cutting back on spending and avoiding shops, the state is directing record resources to the war and financial support for foreign regimes, the return on which is not actually expected.