Russia is selling more and more gold to compensate for the budget deficit. Does this mean that Moscow is running out of money? What is happening to Russian finances?
This year, Russia has sold significant volumes of its gold reserves in an effort to attract funds to reduce the budget deficit. The Central Bank of Russia recently announced that at the beginning of July, gold reserves amounted to 2,282 tons, which means that since January they have decreased by about 43.5 tons.
In other words, they are now at their lowest level since the invasion of Ukraine in February 2022. In early 2026, gold prices reached record levels - 4,800 euros per ounce, after which they fell to 4,000 euros. The gold sales undertaken by Moscow probably brought it over five billion dollars.
"Gold sales mean that other, more liquid assets are being depleted," commented Elina Rybakova, an expert at the Institute for International Economics in Washington, to DW. "This creates a double problem: the deficit is putting pressure on the economy, and the sources of its financing are becoming increasingly scarce."
Russia's budget deficit problems
In recent years, the Russian budget has been under serious pressure due to sharply increased defense spending. Since 2021, these costs have increased more than fourfold, reaching about 16 trillion rubles ($204 billion) in 2025.
Financial consultant Chris Weaver, who has worked in Moscow for more than 20 years, says that Russia's gold sale is significant but not panicky. "The situation is unusual, but the trend is quite natural. This does not mean at all that Russia is going bankrupt, that its money is running out, it has nothing left and it has to sell off the last thing it has," Weaver told DW.
He also explains that the gold was sold not by the Central Bank, but by the National Welfare Fund. "Since the beginning of 2022, gold has become one of the assets that the fund could buy, after American and German bonds became unavailable when sanctions were imposed due to the invasion of Ukraine. Gold has become a key liquid asset for the fund, and this corresponds to its purpose - to sell assets when funds are needed, especially in difficult times. Therefore, it can be said that the fund is being used for its intended purpose."
The purpose of selling gold is precisely to replenish the so-called liquid assets of the National Welfare Fund, in which the total volume of funds is estimated at about $ 150 billion. 50 billion of them relate to liquid assets. "It is important for the authorities to demonstrate that the country is stable and strong, and the presence of $ 50 billion in liquid assets plays an important role in this regard," emphasizes Chris Weaver.
He also points out that it is necessary to take into account how Russia, as one of the world's largest gold producers, can relatively quickly replenish its reserves after sales. Russia ranks fifth in the world in terms of gold reserves (about 2,326 tons), on a par with China, France and Italy and behind only Germany (3,350 tons) and the United States (8,133 tons).
What will happen to Russia's military spending in the foreseeable future?
Russia's large gold sales have raised a number of questions among experts about the state of its budget and the overall sustainability of the Russian economy. According to the latest data from the Russian government, this year's budget spending and deficit could exceed the approved targets by more than one trillion rubles ($12.85 billion). The deficit for the year is currently forecast at 1.6 percent of GDP, or $40 billion, but that amount could rise.
However, the growth in oil and gas export revenues, driven by higher energy prices due to the US war with Iran, seems to have helped Moscow overcome its current budget difficulties. According to Elina Rybakova, ultimately everything depends on these prices and the revenues that Russia receives from the sale of oil and gas. The expert suggests that they are the "real limit" on Moscow's ability to finance the war in Ukraine, which has been going on for 4.5 years.
"It all depends on this. High oil prices bring more income to Russia, but if prices fall - for example, to $60 or $40 per barrel, a crisis will immediately occur," Rybakova predicts. Both she and Weaver warn that despite the obvious difficulties the Russian economy is currently experiencing, for the foreseeable future Moscow will be able to continue to allocate funds for the war, while cutting non-war-related spending.