Russia teeters on the brink of a payment crisis as big business raises the alarm. For the first time, President Vladimir Putin spoke of the looming threat of economic "collapse."

Despite official claims of economic stability from Putin and his aides, the real situation in Russia is worsening swiftly. According to The Moscow Times, the Russian Union of Industrialists and Entrepreneurs has reached out to the government, warning of an impending payment crisis in the economy. The resolution adopted by big businesses calls for the introduction of comprehensive monitoring, debt settlement by state corporations, and an increase in advance government orders from 30% to 75%.

Sources reveal that production companies are primarily suffering, as state corporations and raw material giants delay payments for several months. This has led to a growing shortage of working capital, forcing companies to survive on high-interest loans, while banks witness a spike in overdue debt. Experts caution that this is no mere warning sign but a genuine threat of economic stagnation and subsequent collapse of the payment system.

According to Alexander Kalinin, head of "Opora Russia," many companies and government structures deliberately delay settlements, placing money in deposits with unprecedented 20% annual returns, yielding them high profits. However, their suppliers and contractors suffer as the non-payment chain engulfs the entire market.

Oleg Solntsev, head of monetary policy at CMACP, noted that the growth in funds on company accounts was just 5% in 2024, despite inflation hitting 9.5%. Meanwhile, money in fixed deposits rose by 19.2%. This clearly indicates that funds are not entering the economy but are stuck in financial speculation, looming large as a potential economic crisis.

For the first time in a long while, Putin publicly admitted the threat of a large-scale economic collapse. Addressing oligarchs at an RSPP congress, the president conceded that the "cooling" of the economy, shifted to a military footing, is "inevitable." He stressed that both the government and the Central Bank must tread "very delicately" to prevent an economic "collapse." Putin compared the current situation to being frozen in a cryo-chamber and hoped to keep things under control.

According to Reuters, the president has already conceded in private circles that the economic situation in Russia poses "serious challenges." The high central bank rate of 21% stifles civilian industries and threatens mass bankruptcies. Every fifth company spends two-thirds of its profits on debt servicing.

In three years of war, Russia invested over 20 trillion rubles ($240 billion) in arms and military contracts, creating a giant monetary bubble that ignited record inflation. Budget reserves are swiftly depleting: the budget deficit has hit 10 trillion rubles, and two-thirds of the National Welfare Fund have already been spent to cover it.

These problems have led to bankruptcies in the coal sector, where companies reported 80 billion rubles in losses and are now closing mines. Next in line are metallurgists and other export-dependent industries.

Economists have dubbed 2025 the "year of belt-tightening." The IMF forecasts sluggish economic growth, slowing nearly threefold to 1.5%, with some quarters dipping into negative territory. Even the Kremlin can no longer conceal the scale of the looming catastrophe.

While Putin clings to hopes of a miracle and "delicate solutions," all signs point towards a hard landing for the Russian economy. Propaganda reports can no longer mask the severe systemic crisis that war, sanctions, and Kremlin's economic miscalculations have wrought on the nation.

  War in Ukraine, Putin

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