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Borys's avatar

The claim that $415 billion of corporate debt growth since 2022 is directly tied to war funding is problematic.

Around $250 billion of this increase can be attributed to non-war factors, such as:

- Russian companies acquired $328 billion in foreign-owned assets after sanctions, likely requiring $50–80 billion in borrowing.

- Corporate obligations to non-residents have fallen by $130 billion, necessitating refinancing within Russia.

- Changes in trade terms, such as the loss of advance payments and payment delays, likely added $50 billion in financing needs.

These factors account for much of the debt surge, leaving an estimated $70–100 billion potentially linked to war-related preferential loans.

The suggestion that the banking sector is the primary source of war funding also overlooks critical details:

- Corporate deposits have also risen significantly.

- Banks owe over $200 billion to the extended government (Treasury and Central Bank), creating a more complex picture.

Also, note that investment levels in 2023 were the highest in post-Soviet history. Also, management buyouts of businesses previously owned by expatriates were often financed domestically, further driving corporate borrowing.

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Boris's avatar

References like "Central Bank of Russia" are not much informative; one would expect references to specific tables and publications, better yet direct internet links, because everything the CBR publishes is available online.

For instance, here is the regular release:

Non-financial sector and Households debt, extended

https://www.cbr.ru/eng/statistics/macro_itm/dkfs/ext_dep_indicator

Graphs do not seem to demonstrate anything exceptionally dramatic on the non-financial debt front.

As for the supposed riddle of the continuing expansion of business debt after the discontinuation of the subsidized mortgage program, it most likely reflects the legal mechanics of the urban residential construction sector in Russia. Specifically, mortgages extended to households are held in escrow accounts, and only after the proposed development project (almost invariably condo apartments) is fully subscribed to, developers borrow against these escrow accounts (at the rates that more or less match the underlying mortgages rates), and start actual construction activities. This mechanism creates a lag between the approval of mortgages to households and the approval of lending to developers.

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