Collapse of Business Activity in Russia’s North Leading to Regional Budget Shortfalls Moscow May Soon Not Be Able to Cover, ‘The Barents Observer’ Says

Paul Goble

            Staunton, April 15 – The amount of taxes regions and republics in Russia’s European north have fallen significantly, a reflection of declining business activity and a development that is leaving the governments of these federal subjects with larger budget shortfalls that Moscow’s own deficit may prevent it from being to cover as it has in the past, The Barents Observer says.

            The Russian government is releasing ever less data on such economic trends, Georgy Chentimirov of that outlet says; but there is enough from local media outlets and even from Moscow discussions to reach the conclusion that the situation is bad and getting worse rapidly (ru.thebarentsobserver.com/novosti/provalnyj-start-dohody-regionov-pokatilis-vniz/448754).

            In Russia’s European north, he reports, the number of companies which have gone bankrupt and been liquidated has doubled from the first quarter of last year to the same period of 2026; and “of those which remain in operation, over half are reporting losses.” As result, tax collections from businesses have plummeted by a third or more.

            So far, Chentimirov continues, the federal subject governments are getting enough money from other sources and from Moscow to be able to pay the salaries of state employees; but budgetary problems in Moscow which had a budget deficit in the first quarter equal to what it had projected for the entire year may mean that will soon no longer be possible.

            If Moscow can’t pay, the regional governments won’t be able to either; and they will either be compelled to seek private bank loans which are prohibitively expensive or demand that Moscow allow them to keep more of the taxes they are collecting from other sources. Either step will lead to hardships for their residents and set the stage for a political crisis.