In 2023, the Russian government plans to spend $84 billion on defense, 40% more than expected.
On November 16, Russia made the largest single-day issuance of securities in history, raising 820 billion rubles ($13.6 billion). The UK Ministry of Defense explained the importance of this political move on one page. twitter.
A security issue is a government issue of bonds, stocks, or other instruments that are sold to outside investors to raise funds for the government budget. In this case, the country becomes indebted to the same investors and undertakes to pay interest on the money invested.
This move is crucial for Russia, as bond issuance and debt are a key mechanism to cover defense spending, which has increased dramatically due to the war in Ukraine, as the UK Ministry of Defense explains. Russian officials have planned “national defense” spending in 2023 at 5 trillion rubles ($84 billion), 40% more than the 2023 preliminary budget announced in 2021.
Issuing government bonds is costly in uncertain times. Such a large amount of debt, as British experts argue, indicates that the Russian Ministry of Finance considers today’s conditions quite favorable for investment, but is preparing for a more uncertain financial situation next year.
Earlier, they wrote that Russia does not pay interest on loan bonds. Investors demanded interest on long overdue $1.9 million Eurobond payments. Therefore, the Russians are very close to default.
Ukraine also spends a lot of money because of the Russian occupation. Focus calculated how government spending increased in 2022 – 1.944 trillion hryvnia from the budget had to be spent in 9 months.
Source: Focus
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