Why Is Russia’s National Debt So Low?

Russia has maintained a notably low national debt compared to many other global economies. Its public debt-to-GDP ratio was approximately 16.4% in 2024, contrasting sharply with higher debt levels in developed nations. Understanding this distinct financial position requires examining the country’s economic structure, fiscal management, and strategic use of national reserves.

Understanding Russia’s Revenue Streams

Russia’s financial stability is driven by substantial revenue from oil and natural gas exports. These commodities consistently generate significant income for the state, frequently accounting for 40% to 60% of federal budget revenues. The nation’s budget is highly sensitive to fluctuations in global energy prices, with declines directly impacting government income. Key components include taxes on mineral extraction and export duties.

Beyond the dominant energy sector, other export industries and tax revenues contribute to the national budget. Non-oil and gas revenues have shown growth, comprising up to 78% of the consolidated budget. These non-hydrocarbon revenues originate from domestic sources like value-added tax (VAT) and turnover taxes, bolstered by internal demand and consumer spending. The government actively seeks to diversify its economic base by increasing investment in non-oil and gas sectors, aiming to reduce reliance on volatile commodity markets.

Russia’s Fiscal Discipline and Budget Policy

Russia’s financial management significantly contributes to its low national debt through conservative fiscal policies. The country often aims to achieve budget surpluses rather than deficits. A central element of this strategy is a fiscal rule mechanism, which differentiates between oil and gas revenues and non-oil and gas revenues.

This rule stipulates that oil revenues exceeding a predetermined benchmark price must be directed into stabilization funds. If oil prices fall below this benchmark, the government can draw from these accumulated reserves to cover revenue shortfalls, maintaining budget stability. This mechanism enhances fiscal predictability by reducing the economy’s susceptibility to commodity market volatility.

The government also exercises spending controls, reallocating non-defense expenditures to support other strategic priorities. Russia generally avoids substantial external borrowing, preferring to finance operations internally. This preference results in a comparatively small external debt.

The Role of National Reserves

Russia strategically accumulates national reserves, primarily through the National Wealth Fund (NWF) and its foreign currency reserves. The NWF supports the national pension system and provides a buffer for the federal budget. The fund receives contributions from investment returns and surplus oil and gas revenues, acting as a financial cushion against economic shocks and commodity price fluctuations.

The liquid assets within the NWF are predominantly held in Chinese yuan and gold. As of February 2024, the NWF’s total assets stood at $130.8 billion, with 5 trillion rubles in liquid assets as of November 2024. Complementing the NWF, Russia’s foreign currency reserves are managed by the central bank to facilitate international payments and stabilize the exchange rate. These reserves comprise foreign currencies, gold bullion, and Special Drawing Rights.

As of June 2025, Russia’s foreign exchange reserves reached $688.731 billion. These substantial reserves provide the government with financial capacity to absorb external pressures, including international sanctions, by covering budget deficits without increased borrowing. Should oil revenues decline, the NWF and other reserves can be deployed to bridge the fiscal gap.