Putin borrows £11bn in desperate big to prop up flagging war machine

Putin 'cannot fool the elite' despite trying to avoid failure responsibility

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Vladimir Putin has borrowed almost than £11.5billion in a desperate bid to prop up his ailing war machine in what UK defence chiefs have described as Russia’s “largest ever debt issuance in a single day”. The MoD said Russia’s finance ministry has borrowed £11.4billion ($13.6billion), describing the cash as a “key mechanism to sustain defence spending”.

The tweeted statement explained: “This is important for Russia as debt issuance is a key mechanism to sustain defence spending, which has increased significantly since the invasion of Ukraine.”

Russia’s declared “national defence” spending for 2023 was an eyewatering five trillion rubles (£71.6billion), 40 percent higher than the preliminary budget announced in 2021.

The MoD added: “Debt issuance is expensive during periods of uncertainty.

“The size of this auction highly likely indicates the Russian Ministry of Finance perceives current conditions as relatively favourable but is anticipating an increasingly uncertain fiscal environment over the next year.”

A story published on the website of the state-owned Russian newspaper AIF said Putin had signed a law which established a “new budget rule” and enabled the National Wealth Fund (NWF) to be used to cover the federal budget deficit in 2023-2024.

It explained: “The limit on expenditures of the RF budget within the framework of this rule will be calculated as the sum of non-oil and gas revenues, basic oil and gas revenues, public debt servicing costs, as well as quasi-fiscal operations.”

Spending would be higher, acknowledged the newspaper, without referring to the war directly, meaning NWF funds in the amount of 2.9 trillion (£40billion) and 1.6 trillion (£22billoin) rubles, respectively would be used to cover the budget deficit of the Russian Federation.

The government believed the updated budget rule would ensure a “moderate increase in public debt and the cost of servicing it”, the story suggested, and would also allow “relatively low-interest rates” for the non-budgetary sector.

Speaking last month, an advisor to Ukraine’s President Volodymyr Zelensky told Express.co.uk Russia’s economy was nosediving into a full-blown crisis as a result of damaging Western sanctions.

Vladyslav Vlasiuk said within six months, Moscow was facing the prospect of a disastrous 60 percent drop in gas and oil revenue.

Referring to measures taken by the international community in response to Putin’s invasion of February 24, Mr Vlasiuk, also Deputy Head of the Task Force Ukraine, spearheaded by Prosecutor General Iryna Venediktova, told Express.co.uk: “We see it from the state report in Russia, they had to cut the expenditure from the government by 10 percent at least, which signals that there is some impact from the sanctions.

“Also this year the government has raised the cost of utility bills for average Russians twice. The first time it was in July by six percent and now nine percent.

“So we see the hypocrisy of their Russian propaganda – they always say ‘you guys in Europe, your sanctions are harmful to yourself, you had to increase your utility bills because of sanctions’, but now they’re doing the same exactly because of the sanctions.”

Assessing the impact which sanctions were having, Mr Vlasiuk explained: “The general rule is that the more complicated the economy sector, the more they are impacted by sanctions.

So with the aircraft industry, almost no aircrafts are being produced anymore because they were so dependent on Western technologies and components

“If we look at the oil industry, and the gas industry, again, there is great dependence on Western technologies so it is really difficult for them to continue extracting oil and gas.”

(More to follow)

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