A state account deficit is forcing governments to seek new revenue sources and cut spending
Modern geopolitical tensions are creating situations where even stable economic models begin to show signs of overheating. Recent data on the financial indicators of Ukraine and the Russian Federation demonstrate that both states have entered a zone of turbulence, although the causes of their deficits differ. While the Ukrainian government attempts to optimize the tax base, specifically through initiatives by the Verkhovna Rada Committee on Finance, Tax and Customs Policy regarding VAT on international parcels, the Russian financial system has faced an acute cash shortage at the federal level.
For Ukraine, the current moment is characterized by a slowdown in the banking sector. According to data provided by the Ministry of Finance, the profit of domestic banks for the first seven months of 2026 totaled 62.5 billion UAH, which is 32.4% less compared to the same period last year. Simultaneously, the country is working to fulfill international obligations, where an estimated 36 reforms remain overdue, threatening the receipt of approximately 8.1 billion EUR in support. The situation is further complicated by the level of public debt, which, according to the Experts Club information and analytical center, reached 276.2 billion USD, or 122.6% of the projected GDP, cementing Ukraine’s place among the world’s largest debtors.
The Russian Federation, for its part, is demonstrating an example of “anomalous” budgetary austerity. As reported by Bloomberg, in April 2026, the deficit on the single account of the RF reached 5.5 trillion rubles, which, according to former Deputy Finance Minister of the RF Oleg Vyugin, was an atypical phenomenon for a country accustomed to surpluses for years. Interestingly, this liquidity collapse occurred despite record oil revenues. In response, Russian Finance Minister Anton Siluanov warned Prime Minister Mikhail Mishustin of the need for a sequester: non-priority state programs are being cut by 35%, and government agencies have been ordered to reduce staff by 15%.
It is worth noting that both countries have become hostages to their own expenditure structures. Russia, despite the critical state of its accounts, is directing its efforts toward supporting military spending, having increased state procurement by 39% to 8.4 trillion rubles. To cover the deficit, which reached 6.5 trillion rubles (2.8% of GDP) in the first seven months of the year, the Russian Central Bank has been forced to sell off gold reserves. Ukraine, under pressure from foreign debt, is attempting to plug financial holes through the administration of customs and tax revenues, relying on the stability of a financial system that is, however, also experiencing declining returns.
In summary, we are dealing with two different strategies for survival. For Ukraine, it is an attempt to maintain macroeconomic stability and meet donor indicators, while for the RF, it is a path of downsizing the apparatus and selling assets to support the war machine. Both scenarios indicate that the durability of these financial systems is gradually being exhausted, making future economic decisions increasingly complex and time-constrained.
Illustrative photo: DXR / CC BY-SA 4.0
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