Russia Ukraine War Impact : Due to the ongoing war with Ukraine, there is a lot of pressure on the exchequer of Russia. Russia now has to try new methods for funding the war. Under this exercise, Russia has raised more than 11 billion pounds from investors by issuing debt bonds. Russia issued an 11.4 billion pound debt bond late last week. According to the British Ministry of Defence, this is a record in the history of Russia for raising funds from debt bonds on such a large scale in a single day.
Debt Bonds raised £11.4bn
Russia’s military expenditure may increase by 40 percent next year amid the ongoing war with Ukraine. Russia has taken this step to meet this burden on the exchequer. Russia wants that the government revenue should not be under pressure due to the war with Ukraine. That’s why Russia is trying to raise more and more cash by any means.
Russia’s economy in recession
The tenth month of the Russia-Ukraine war is about to begin and Russia is facing several foreign sanctions because of the war. According to the data that came last week, after the second quarter of this year, Russia’s growth rate has declined by 4 percent in the third quarter as well. There was a decline of 4.1 percent in the growth rate in the second quarter. Due to this the country’s economy has entered into recession.
Hundreds of big companies have fled Russia amid the war with Ukraine or have refused to do business there and this has reduced exports. Oil and gas sales increased after the war broke out in Ukraine, due to which there was not much pressure on Russia’s economy this year, but due to the large-scale sanctions imposed by the US and the European Union, Russia’s revenue in the year 2023 will be very high. It is expected to decrease. According to economic experts, this year Russia’s economy will see a decline of 4.6 percent. This will be the second year in the last three years when there are signs of recession.
Russian President Vladimir Putin wants that the supply of troops for the war should not be affected and in view of this, Russia wants to supply more oil and gas to China and Turkey. But both these countries want to buy gas and oil more cheaply than European countries. In such a situation, Russia will not be able to compensate for the shortfall in the export of other goods. Given Putin and his administration’s accusations of war crimes, even after the end of the Ukraine war, Russia’s prospects for restoring global trade relations seem remote.
Russia has lost more than 14 billion pounds
It is difficult to calculate the exact cost of war with Ukraine to Russia. According to an estimate made by Forbes in August, by that time Russia had lost equipment worth at least 14 billion pounds from this war. However the actual cost of the war would be much higher than the equipment lost. It will also have to look at the sanctions imposed by different countries on Russia, the hindrance in the working life of the people there and the loss caused to the lives of working men.
It is becoming difficult to pay interest on international debt
Russia’s ability to raise capital through debt has also been directly affected. In July this year, Russia has also failed to pay interest on international debt. Moscow owed $100 million to international lenders, but was unable to pay after sanctions forced Russia to be cut off from the international banking system. It is the first time since 1918 that Russia has defaulted on interest payments.
Although the Kremlin has denied defaulter conditions, rating agency Moody’s has downgraded it after the end of the one-month grace period. Declared the status of default in subsequent interest payments. The initial impact of being declared a defaulter is not much, but international debt could be costly for Russia in the future.