Geopolitics Decanted with Dmitri Alperovitch Keeping Russian Economy Afloat: Kremlin's Economic High Wire Act
Oct 22, 2025
Dmitri Alperovitch chats with Chris Weafer, CEO of Macro-Advisory, an expert on the Russian economy with decades in Moscow. They dive into the current state of Russia’s economy, dissecting fiscal pressures and budget challenges amid ongoing military spending. Chris analyzes how fluctuating oil prices and sanctions threaten economic stability. He warns that prolonged war efforts could strain recovery, while highlighting the Kremlin's precarious balancing act to maintain economic flow without imminent collapse.
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High Rates Cool Inflation But Hurt Firms
- The Kremlin raised interest rates to 21% to cool consumer demand and curb inflation, which succeeded in reducing inflation from ~10% toward 8%.
- High rates fix inflation but suppress private-sector borrowing, increasing bankruptcies in vulnerable sectors.
Sovereign Cushion Is Shrinking
- The National Welfare Fund's liquid portion is mostly exhausted after financing recent deficits, leaving roughly $40–50 billion available.
- That depletion creates a tight runway unless borrowing or higher oil revenues appear.
Use Domestic Debt To Preserve Reserves
- Fund deficits by issuing local debt and raising some taxes instead of drawing down the National Welfare Fund.
- Keep real yields attractive so domestic savers buy government bonds, even if it keeps borrowing costs high.