Russia’s official debt-to-GDP ratio of roughly 20% is a technically true number doing heavy propaganda work. The real question is not the size of the debt, but what it costs to keep that debt alive, and on that measure Russia already looks worse than most high-debt Western economies.
The Snapshot Versus the Burden
Debt-to-GDP is a snapshot. Servicing cost is the actual burden. Germany spends about 3% of its budget servicing debt, Japan around 2%, France roughly 8%, Britain 9%, Italy 10%, and the US about 14%.
Russia, with its supposedly pristine 20% ratio, spent an estimated 10% of the federal budget on debt service in 2025. It already exceeds most high-debt Western economies and keeps rising.
A small debt is only an advantage if you can borrow cheaply. Russia cannot.
Why Russian Borrowing Is Structurally Expensive
The reason is structural. Russia borrows almost entirely at home through OFZ bonds, because sanctions have closed external markets. Domestic banks buy those bonds, but they demand yields in the 14 to 18 percent range.
Those are wartime, high-risk rates, not the 2 to 4 percent that Germany or Japan pay thanks to reserve currency status and investor confidence. The comparison with Japan’s 200% or Italy’s 140% debt-to-GDP is designed to stop you from asking what those debts actually cost.
The Self-Reinforcing Debt Loop
The loop works like this. The budget runs a large deficit, driven by military spending. The deficit forces more OFZ issuance. The Central Bank keeps rates high to fight inflation, which pushes OFZ yields higher.
Higher yields raise the cost of servicing the debt, which widens the deficit further. Then the Finance Ministry needs more borrowing. The circle closes.
Visible Strain in the System
The strain is already visible. The Finance Ministry has suspended OFZ auctions at times because it refuses to accept even higher yields. Russians pulled record amounts out of banks this summer, which drains the very liquidity the bond market depends on.
The deficit is running far above the annual plan. The Central Bank’s own forecast says the key rate will stay at or above 10% for at least a year and a half.
- Suspended OFZ auctions due to unacceptable yields
- Record household withdrawals from banks
- A deficit running far above the annual plan
- A key rate forecast at or above 10% for at least 18 months
Russia is locked into double-digit domestic yields, a shrinking pool of domestic savings, and a budget that needs ever more money for a war that cannot be stopped without ending the regime’s reason to exist. That is the part the propaganda never mentions.