Russian Officials Warn Putin of Looming Financial Crisis as Ukraine War Drags On

Moscow's budget deficit widens as oil revenue plunges and sanctions take toll, raising fears of banking crisis by summer

Published on Feb. 8, 2026

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Russian officials have been warning President Vladimir Putin that a financial crisis could hit the country as soon as this summer, with oil revenue crashing, the budget deficit widening, and the costs of the ongoing war in Ukraine becoming increasingly unsustainable. Sources say the Kremlin's economic situation is deteriorating rapidly, with spiraling inflation, layoffs, and concerns of a potential banking crisis on the horizon.

Why it matters

Russia's deepening financial troubles could severely undermine Putin's ability to continue funding the war in Ukraine, which has already resulted in massive losses of Russian troops and equipment. A financial crisis could also destabilize the Russian economy and lead to social unrest, posing a threat to Putin's hold on power.

The details

According to the report, Russia's oil revenue crashed by 50% in January from a year earlier, while the budget deficit continues to widen even after tax hikes. A Moscow business executive warned that the crisis could arrive in 'three or four months' amid spiraling inflation, with restaurants closing and thousands of workers being laid off. The economic strains stem from the sanctions imposed on Russia following its invasion of Ukraine four years ago, as well as the costs of mobilizing the economy for a prolonged war.

  • In June 2026, Russian banks raised red flags on a potential debt crisis as high interest rates weighed on borrowers' ability to pay off loans.
  • Also in June 2026, the head of the Russian Union of Industrialists and Entrepreneurs warned that many companies were in 'a pre-default situation'.
  • In December 2026, the Center for Macroeconomic Analysis and Short-Term Forecasting, a state-backed Russian think tank, said the country could face a banking crisis by October if loan troubles worsen and depositors pull out their funds.

The players

Vladimir Putin

The president of Russia who has been leading the country's invasion of Ukraine.

Volodymyr Zelensky

The president of Ukraine, who has been leading the country's defense against the Russian invasion.

Mark Rutte

The NATO Secretary General who stated that more than 30,000 Russian troops died in December 2026 alone.

Alexander Stubb

The Finnish President who warned that Russia cannot afford to end the war in Ukraine because it has become 'too big for Putin to fail'.

Dmitry Belousov

The head of the state-backed Russian think tank Center for Macroeconomic Analysis and Short-Term Forecasting, who warned of a potential banking crisis in Russia.

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What they’re saying

“The situation in the Russian economy has deteriorated markedly. The economy has entered the brink of stagflation for the first time since early 2023.”

— Dmitry Belousov, Head of the Center for Macroeconomic Analysis and Short-Term Forecasting (Financial Times)

“Russia has to continue the war because this war is too big for Putin to fail. When you add on to that the Russian economy is in shambles, which means they're not going to be able to pay their soldiers which means zero growth, end of reserves, interest rates and inflation in double digits. So Putin cannot afford to end this war. This is my big worry.”

— Alexander Stubb, Finnish President (World Economic Forum)

What’s next

The judge in the case will decide on Tuesday whether or not to allow Walker Reed Quinn out on bail.

The takeaway

Russia's deepening financial crisis, driven by the costs of the war in Ukraine and Western sanctions, is putting increasing pressure on Putin to find a way to end the conflict, even as he appears unwilling to do so. The potential for a banking crisis and social unrest in Russia could further undermine Putin's grip on power and force him to reconsider his military strategy.