In its November 19 intelligence update, the British Defense Ministry addressed Russia’s debt issuance saying that it’s a “ key mechanism to sustain defence spending” and that the Russian finance ministry is likely anticipating an “increasingly uncertain fiscal environment over the next year.”
The report goes as follows:
- On 16 November 2022, Russia conducted its largest ever debt issuance in a single day, raising RUB 820 [billion] (USD $13.6 billion). 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 is planned at approximately RUB 5 trillion (USD $84 billion), a more than 40% increase on the preliminary 2023 budget announced in 2021.
- 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.
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