The Telegraph: Russian Banks Are On The Verge Of Decline

Every third ruble goes to military needs.

Russian banks are scrambling to get help from Moscow as borrowers look to repay loans in an economy hit by war. At least three of the country's biggest banks are considering a government bailout. This is reported by The Telegraph.

The moves are a sign that the country is struggling under the pressure of Russia's invasion of Ukraine.

It is noted that officials have ordered banks to avoid disclosing the full extent of bad loans and instead restructure their accounts to show a better picture. However, such tactics are likely to be exhausted, according to media reports, which is why the banks need Moscow's support.

"Russia's economy is under pressure from the costs of Vladimir Putin's war in Ukraine, sanctions imposed by Western countries, the loss of labor both in the armed forces and through flight abroad, and falling oil prices, which threaten a critical source of revenue for the government," the publication recalled.

Official estimates show that Russia's economy grew by 4.3 percent last year. According to The Telegraph, every third ruble spent by Moscow is spent on military needs.

At the same time, spiraling food prices and labor shortages have also increased inflation to double digits. In particular, ordinary Russians are struggling to buy some of the most basic necessities, as even potatoes are now in short supply in Russia.

"The central bank is trying to control the situation despite keeping interest rates at 20 percent. Government finances are also under pressure from large bonus payments and high salaries for soldiers, although they help support military family budgets even in the face of soaring inflation," the piece explained.

In turn, Russia's revenues have also fallen from oil sales by a third compared to last year.

The ruble is expected to depreciate by 30 percent against the dollar over the course of this year, which is expected to further increase the cost of imports into Russia, analysts at Goldman Sachs predicted.

"More pressure is coming. Donald Trump is threatening to impose 100 percent tariffs on US imports of products from countries trading with Russia unless Putin agrees to a deal on Ukraine, threatening to further isolate the rogue nation from the global economy," The Telegraph summarized.

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