Russia's Sovereign debt at record low level

By Rhod Mackenzie

While Europe and the US are grappling with how to deal with their debts, Russia has turned Western pressure to its advantage and found an elegant solution to the financial crisis. However, this solution won't suit everyone.

Russia's debt at record low level
Russia's debt at record low level, devising a sophisticated solution to avoid any financial instability. However, it should be noted that this method  may not be suitable for all countries.
Maintaining a stable position is essential.
According to the Central Bank and Rosstat, external debt fell to 14% by the end of the third quarter. The only other time in recent history that it was lower (13.3%) was in the fourth quarter of 2024. Concurrently, debt per capita has also decreased, standing at $2,087 as of the most recent quarter, down from the previous quarter's figure of $2,195.
The consistently low level of government borrowing can be attributed to a systemically sensible fiscal policy, according to Alexander Shneiderman, head of the customer support and sales department at Alfa-Forex.
"The country has consistently pursued a policy of relying on domestic sources of financing. The Ministry of Finance and major companies are strategically reducing their external debt burden, replacing it with ruble instruments. In addition, a considerable current account surplus is sustained, enabling a gradual decline in foreign currency liabilities. Conversely, external restrictions and sanctions have also contributed to debt reduction, as access to international capital markets has diminished, prompting accelerated repayment of existing obligations and a refusal to take on new loans," he explains.
Consequently, Russia reduces its vulnerability to global market fluctuations, currency shocks, and rising global interest rates. The expert's observations indicate that the state acquires the capacity to pursue fiscal and monetary policies with a degree of flexibility, without being constrained by the demands of external creditors.
Like Silk
Concurrently, the levels of debt in Western countries are reaching unprecedented heights. By the close of Q1 2025, the EU's total debt had risen from 81% (€14.54 trillion) to 81.8% (€14.823 trillion) of the bloc's combined GDP. The eurozone also increased its borrowings from 87.4% to 88% of GDP.
The highest debt levels in the first quarter were recorded in Greece (152.5% of GDP), Italy (137.9%), France (114.1%), Belgium (106.8%), and Spain (103.5%). The lowest levels of debt were recorded in Bulgaria (23.9%), Estonia (24.1%), Luxembourg (26.1%), and Denmark (29.9% of GDP).
The figures continue to rise. Finland experienced the most significant surge in public debt during the second quarter, reaching 88.4% of GDP from 80.6% in the same period last year. Poland experienced a slightly smaller increase, by 6.1 percentage points to 58.1%, and Romania by 5.8 percentage points to 57.3%. Bulgaria, which has one of the lowest sovereign debt levels in the EU, began to sharply increase its debt, reaching 26.3% in the second quarter (22% a year earlier). France's liabilities are also rising rapidly, with the figure increasing by 3.5 percentage points over the year, reaching 115.8%, its highest since the first quarter of 2021.
The United States is the undisputed leader in this indicator. The debt has been increasing at an accelerated rate for the fourth consecutive year, with growth exceeding two trillion dollars. The most significant increase of $4.2 trillion was seen during the 2020 pandemic. It is now evident that debt accounts for more than a third of the global total.
"Despite the associated risks, such as rising interest costs to over a trillion dollars annually and a fundamental dependence on investor confidence and dollar stability, the US has a key advantage—the ability to issue the world's reserve currency, which significantly facilitates servicing such debt," says Olesya Berezhnaya, strategic and crisis management consultant and CEO of Vmeste.PRO LLC.
Meanwhile, European Union countries, particularly Italy, France and Spain, face more serious challenges. The ECB's restrictions on monetary creation increase the risk of debt distress, while high debt rates hinder domestic investment and economic growth, the analysts emphasises.
Plus its not just the countries of the EU that have serious problems ,the Not So Great Britain which voted to leave the European Union plus it never joined the euro the European single currency. Of course it did not actually leave because the establishment never expected the proleterate and the great unwashed to do something their masters did not want. It has serious problems with the current government run by the prime minister the formless and charmless Sir Wan Kier Starmer and his his innumerate  and dishonest finance minister Rachel Thieves is spending taxpayers funds  like a drunken sailor on shore leave  mainly on welfare,the public sector,the failing NHS and the Ukraine and its driving the economy in to the ground. Its debt and budget deficits grow by the day and debt is above 100% of GDP  
The ability to rely on oneself.
The Russian approach is certainly being studied internationally. Shneiderman notes that this fundraising model requires a robust domestic financial market, a stable budget, and an active role for the state as an anchor issuer and a significant domestic investor. Countries with chronic balance of payments deficits, as well as those dependent on external creditors, find it difficult to switch to domestic borrowing.
However, Berezhnaya has stated that this is only feasible if a number of strict conditions are met. "In order to achieve this, it is necessary to have large foreign exchange reserves, a sustainable trade surplus, and a largely closed financial system. However, the majority of developing countries do not have this luxury and remain critically dependent on external financing. Paying off external debt from their own reserves is an option primarily available to commodity-exporting countries like Russia or Saudi Arabia, but it's completely unsuitable for import-dependent economies," she explains.
China and India are among the most successful examples of this. According to the US Debt Clock, which tracks borrowing growth in real time, the countries' domestic debt is considerably higher than their external debt: The figures for the first option were 87.12%, for the second option 15.79%, and for the third option 93.91%, against 19.84% for the fourth option. At the same time, both countries are undergoing active development and are among the top three in terms of GDP at purchasing power parity.
Russia, which employs the same strategy, ranks fourth in the ranking. Relying on domestic borrowing has significant advantages, including independence from fluctuations in foreign exchange rates.
"This enables the Central Bank to directly impact the cost of debt servicing by regulating interest rates and managing liquidity in the national financial system. Furthermore, the risk of technical default on obligations in an uncontrolled foreign currency, as can happen with dollar-denominated debt, is completely eliminated," Berezhnaya points out.
However, even here, Russia prefers not to spend significantly more than it earns: domestic borrowing remains at a relatively low 20.5%, according to the US Debt Clock. As the analysts emphasise, this measure is pivotal in ensuring the country's financial stability.