Russia’s central bank has reduced its gold holdings to their lowest level in nearly seven years as the Kremlin faces a widening budget deficit, declining energy revenues and mounting expenditure on its war against Ukraine.
Russia has carried out its largest sustained reduction in gold reserves since the financial crisis of 1998, disposing of approximately 62 tonnes of the precious metal since December 2025 as the government draws on accumulated reserves to finance a growing federal budget deficit.
According to figures released by the Bank of Russia on Tuesday, 20 October, the country’s monetary gold reserves declined by another 200,000 troy ounces, equivalent to approximately 6.2 tonnes, during September.
The latest reduction brings Russia’s official gold holdings to 72.8 million troy ounces, or approximately 2,264 tonnes, their lowest level since the end of 2019.
The central bank has now reduced its gold holdings for ten consecutive months, reversing the accumulation strategy pursued by Moscow in the years preceding its full-scale invasion of Ukraine.
Largest gold sell-off since the 1998 crisis
The scale of the current reduction is exceptional by Russian historical standards.
At that time, Russia’s central bank disposed of approximately 118 tonnes of gold over three months as the government defaulted on domestic debt and the rouble collapsed.
Some of those holdings were subsequently replenished, leaving the country’s gold reserves approximately 50 tonnes lower at the end of 1998.
The reduction recorded during 2026 has already exceeded that annual net decline, although Russia’s present financial position differs substantially from the circumstances surrounding the 1998 default.
The monetary value of Russia’s remaining gold reserves stood at approximately $301.6 billion at the end of September, compared with $333.5 billion a month earlier. The change reflects movements in gold prices as well as the reduction in physical holdings.
Budget deficit reaches 7.3 trillion roubles
The sales come as the Russian government struggles to contain expenditure associated with its continuing military campaign against Ukraine.
Moscow now expects its federal budget deficit to reach 7.3 trillion roubles, approximately $87 billion, in 2026. That represents 3.2 per cent of gross domestic product, twice the deficit originally anticipated.
Military and security expenditure is expected to account for approximately 38 per cent of total federal spending this year.
The government has increasingly relied on its National Wealth Fund, established to accumulate surplus energy revenues, to cover budget shortfalls.
The central bank’s gold transactions are linked to operations involving the fund. Under this mechanism, the Bank of Russia conducts corresponding market sales following Finance Ministry transactions using the fund’s assets.
Figures published by Russia’s Finance Ministry earlier this month showed that the National Wealth Fund’s liquid assets had fallen to approximately 3.8 trillion roubles, equivalent to $45 billion, as of 1 October. This was down from approximately 4 trillion roubles a month earlier.
The fund’s total assets remained substantially larger, at almost 13 trillion roubles, but much of that amount is invested in shares, bonds and other holdings that cannot immediately be converted into funds for government expenditure.
War expenditure puts pressure on Kremlin finances
Russia’s fiscal problems have been compounded by weaker oil and gas revenues, a slowdown in economic activity and the increasing cost of sustaining military operations.
Although energy exports continue to generate substantial income, government revenue has failed to keep pace with spending commitments.
Moscow has consequently increased domestic borrowing, introduced additional taxes and sought alternative sources of budget financing.
The latest gold figures provide further evidence of the financial demands imposed by the war, now approaching its fifth anniversary.
They do not indicate that Russia is approaching an immediate financial collapse. The country still holds considerable gold and foreign exchange reserves, with the central bank reporting total international reserves of approximately $731.8 billion at the end of September, although access to part of its overseas assets remains restricted by Western sanctions.
Nevertheless, the continued liquidation of gold holdings reduces the reserve assets available to the Russian authorities at a time when military spending remains elevated and the government faces pressure to meet its domestic financial commitments.
For President Vladimir Putin, the growing budget deficit introduces an additional economic consideration into decisions over the duration of the war.
The September figures show that Moscow is increasingly drawing on assets accumulated before the invasion to support current expenditure, while its capacity to rebuild those reserves remains dependent on future revenues and the government’s ability to restrain spending.
Russia has placed five foreign-owned businesses under compulsory administration, including Belgian manufacturer Ontex and French flooring group Tarkett. The latest seizures deepen the confrontation over sanctions, frozen Russian assets and the future of European investment in Russia.
Russian President Vladimir Putin has ordered the transfer of five Western-owned businesses into compulsory Russian management, extending a campaign of asset seizures targeting European companies that continued operating in Russia after the full-scale invasion of Ukraine.
The decree, signed on 15 October, affects businesses with combined annual revenues exceeding 53 billion roubles, approximately €530 million. They include French flooring manufacturer Tarkett, Belgian hygiene products group Ontex, German packaging producer Menshen, Kappa Rus and Eviosys Packaging Kuban, now linked to American group Sonoco.
Under Presidential Decree No. 738, operational control has been transferred to Centre Capital, a little-known Moscow company established in February 2026 with registered share capital of just 10,000 roubles.
The decision follows similar interventions against Nestlé, Auchan, FM Logistic and Metro in September. Together, the measures demonstrate how Moscow is using foreign-owned businesses as instruments of economic retaliation against countries supporting Ukraine.
Foreign businesses placed under Russian control
Centre Capital is headed by Marat Mirkhaydarov, a former senior official in Russia’s Zabaykalsky region who reportedly served with the Akhmat military formation during Russia’s war against Ukraine.
The scale of the companies placed under his management contrasts sharply with the financial standing of the administrator.
Tarkett’s Russian operations generated approximately 19.3 billion roubles in revenue during 2025, while Kappa Rus recorded 16.5 billion roubles and Ontex RU another 10.3 billion. Eviosys Packaging Kuban and Menshen Packaging CIS reported approximately 6.1 billion and 1.4 billion roubles respectively.
The decree does not formally transfer ownership of the companies to Centre Capital. It does, however, remove the foreign shareholders’ effective control over management, operations and commercial decisions.
For Belgian manufacturer Ontex, the consequences are immediate.
In an official statement issued on 16 October, the Aalst-based company confirmed that a government-appointed administrator had assumed operational control of its Russian subsidiary.
Ontex Russia employs approximately 350 people, operates a manufacturing facility in Noginsk and maintains a sales office in Moscow. The subsidiary accounts for around five per cent of the group’s total revenue and between seven and eight per cent of adjusted EBITDA.
The company said it was examining measures to protect its assets and maintain business continuity.
Tarkett likewise confirmed that it was losing effective control of its Russian operations.
A mechanism established in 2023
The legal framework for such interventions dates to April 2023, when Putin introduced Decree No. 302, allowing the Russian authorities to place assets associated with countries designated as unfriendly under temporary external management.
The appointed administrator can exercise extensive ownership-related powers, although the formal right to dispose of the assets remains excluded.
Crucially, the arrangement can be terminated only by presidential decision. There is no automatic deadline for returning operational control to the original owners.
Moscow maintains that the measures are reversible. Nevertheless, the loss of management authority raises questions about whether businesses could eventually be returned with their financial position, organisational structure and commercial value intact.
The Kremlin’s approach also serves domestic economic objectives. Keeping factories, retail networks and distribution facilities operating under Russian management helps preserve employment, production capacity and established supply chains.
At the same time, appointing Russian administrators allows the authorities to exercise greater influence over businesses originally developed through foreign capital, technology and expertise.
European companies caught in sanctions confrontation
Kremlin spokesman Dmitry Peskov has explicitly linked the seizures to the nationality of the affected companies and the policies of their governments.
He accused European states of participating in the unlawful seizure of Russian property through sanctions and financial restrictions.
Moscow’s argument centres partly on approximately €210 billion in Russian sovereign assets immobilised in the European Union, most of them held through Belgium-based securities depository Euroclear.
The European Union has used extraordinary revenues generated by those assets to support Ukraine, while further proposals involving the underlying funds remain subject to legal and political debate.
Belgium has been particularly concerned about potential financial exposure and legal claims. As EU Today reported in September, a Belgian Council of State judgment raised additional questions about the administrative procedures governing certain frozen assets.
Moscow’s treatment of European businesses adds another dimension to this confrontation. By retaining control over foreign-owned industrial and commercial assets, Russia possesses a means of exerting pressure on companies whose governments support sanctions and military assistance to Ukraine.
The implications are particularly serious for Western banks that still maintain substantial Russian operations.
Austria’s Raiffeisen Bank International and Italy’s UniCredit remain exposed to Russia through local subsidiaries. Any extension of compulsory administration to financial institutions could create additional difficulties involving deposits, capital and banking supervision.
The cost of remaining in Russia
The seizures also expose the financial risks faced by Western companies that delayed their withdrawal after February 2022.
Many initially sought to protect their investments, employees and commercial infrastructure. Others reduced operations but retained ownership, expecting that conditions might eventually permit an orderly sale or renewed business activity.
Russian restrictions have progressively complicated that calculation, requiring foreign investors from designated countries to accept substantial discounts on asset sales and obtain official approval for transactions.
Companies remaining in the country now face the additional possibility that the government will appoint administrators without their consent.
The consequences extend beyond the businesses immediately affected. Russia is establishing a precedent under which foreign investment can remain legally owned by its original shareholders while its economic benefits and operational management are placed beyond their control.
For European governments, the latest decree illustrates the increasing connection between commercial interests and geopolitical decisions.
The Kremlin has demonstrated that sanctions imposed over its invasion of Ukraine can be answered not only through diplomatic or financial measures, but also through direct intervention in European-owned businesses operating on Russian territory.
Any eventual negotiation over sanctions relief and the restoration of economic relations will consequently have to address the status of these assets, the rights of their original shareholders and the question of compensation.
Until then, Western companies remaining in Russia face an investment environment in which the ultimate authority over their businesses rests increasingly with the Kremlin rather than their shareholders.
A reported Ukrainian drone strike has interrupted operations at a Yandex data centre in Russia’s Ryazan region, while another attack was reported at a Gazprom-owned refinery.
A Ukrainian drone attack has reportedly forced the closure of a Yandex data centre in Russia’s Ryazan region, causing a fire and disrupting part of the company’s infrastructure. Shares in the Russian technology group fell by more than three per cent in early Moscow trading on Thursday, 8 October.
The installation in Sasovo was affected during overnight strikes on Russian territory. Yandex said it was working to restore affected infrastructure, while its principal consumer services remained operational. The incident has raised questions about the vulnerability of Russia’s digital economy to Ukraine’s long-range strike campaign.
Fire at Sasovo technology facility
The affected data centre began operating in 2014 in buildings formerly occupied by the Sasta machine-tool manufacturing plant. Yandex subsequently connected the installation to Moscow by fibre-optic communications links as part of its wider computing infrastructure.
Ryazan regional governor Pavel Malkov said Russian air defences intercepted two drones over the region. He reported a fire on the roof of an industrial building in the Sasovo district and damage to windows in nearby private homes. No casualties were reported.
According to a statement on the incident, the situation had been brought under control while work to restore infrastructure continued. Yandex said its main consumer services remained operational.
The company’s cloud division also reported an electricity supply problem affecting an availability zone known as ru-central1-b. Clients were advised to use alternative zones where necessary to maintain service continuity.
Yandex shares decline
Yandex shares dropped by approximately 3.4 per cent to 3,568.5 roubles in early trading on the Moscow Exchange. The decline followed news of the fire, although a single trading session cannot establish the long-term financial cost of the disruption.
Yandex operates search, advertising, navigation, artificial intelligence and cloud computing services. Its infrastructure therefore supports commercial users as well as the company’s own applications. The duration of the interruption, the extent of physical damage and the cost of repairs will determine the wider impact.
In a separate development, explosions and a fire were reported on Thursday near the Gazprom Neftekhim Salavat refining and petrochemical complex in Russia’s Republic of Bashkortostan, around 1,400 kilometres from the Ukrainian border. The precise location of the fire and the extent of damage had not been independently established.
The Gazprom-owned complex processes hydrocarbon feedstock and produces petrol, diesel, fuel oil and petrochemicals. It has previously been targeted by Ukrainian drones. The latest reported incident comes amid repeated attacks on Russian refining and fuel infrastructure.
Russia’s technology sector faces new risks
Ukraine’s long-range economic campaign has focused heavily on oil refineries, fuel stores, military production plants and transport infrastructure. A strike affecting a major data centre introduces another category of vulnerability: the computing equipment and supporting utilities used by the digital economy.
Such sites serve businesses, financial institutions and industrial enterprises, and can also support defence-related activities. However, no publicly verified evidence establishes that the Sasovo data centre was directly involved in Russian military operations.
Damage to power supplies, cooling systems and network connections can interrupt services without necessarily destroying servers. Operators with geographically distributed facilities may be able to shift workloads to unaffected locations. The suspension of one centre therefore does not mean that Russia’s internet infrastructure has ceased functioning.
Economic pressure on Moscow
The attacks coincide with Russia’s plans for substantial military expenditure in 2027. The draft federal budget envisages considerable government spending and borrowing as Moscow continues its war against Ukraine.
Ukraine’s strikes on economic infrastructure are intended to increase the cost of maintaining Russia’s invasion. Disruption to energy facilities can affect fuel production and revenue, while attacks on technology and industrial sites may interrupt wider commercial and logistical operations.
The cumulative effect depends on the severity and duration of the damage. Neither the reported temporary closure of the Yandex facility nor preliminary accounts of the Salavat fire establish the scale of lasting losses.
The incidents nonetheless illustrate the exposure of Russian industrial and technology assets far beyond the Ukrainian border, as Kyiv increasingly targets infrastructure that supports the country’s economy.
More than 50 Russian companies could default on their bonds this year, the most since 2009, a rating-agency analyst told Russian newspaper Izvestia, which reported it on 6 October.
Russia's wartime economy is straining under high interest rates, and the budget is too: the 2026 deficit has nearly doubled from the earlier forecast to a record $88 billion, with more deficits planned for the next three years as Moscow raises taxes to fund the war and plans its biggest defense budget since the full-scale invasion began.
A default is a situation in which a company cannot make promised interest payments to investors on time or repay borrowed money. If a payment is not made by the agreed deadline, the company becomes delinquent, which under certain conditions is recognized as a default.
So far this year, 20 companies have defaulted for the first time, compared with 24 in all of 2025, said Mikhail Nikonov of the Expert RA rating agency. Most of the companies that missed payments are small issuers of high-yield bonds, Izvestia reported.
In 2026, Russian companies have missed payments totaling 41 billion rubles (about $490 million), compared with 34 billion rubles (about $410 million) the previous year, according to investment bank Sinara.
Russia faces a new wave of corporate defaults
By the end of 2026, the number of Russian companies unable to service their ruble-denominated debt on time could reach 40–50, the highest level since 2010, said Pavel Zholobov, junior managing director at the NRA rating agency.
The number of bond defaults in 2026 has already reached its highest level in a decade, Zholobov said. Similar figures were recorded in the mid-2010s: in 2014, 35 companies missed payments; in 2015, 52 did so; and in 2016, there were 44 issuers. This occurred in part after Western sanctions were imposed on Russia over its annexation of Crimea and its war in Donbas, as well as amid a halving of oil prices and a sharp weakening of the ruble.
So-called "little green men" (the Russian occupation troops comprised special forces who removed insignia, wear face masks to prevent identification and call themselves a "Crimean self-defense force") surround a Ukrainian military base in Perevalne, Crimea, during the Russian annexation of the peninsula in February-March 2014.
There were more defaults only in 2009. At the time, amid the fallout from the global financial crisis, more than 100 issuers faced payment problems, while the volume of distressed debt reached nearly 200 billion rubles, Zholobov noted.
High interest rates put pressure on companies
This time, the main reason for companies' difficulties in making bond payments has been the prolonged period of high interest rates, which has continued since 2023. Companies are raising financing at high interest rates but are unable to refinance their debt on more favorable terms, explained Ekaterina Sidorova, head of the Foreign Exchange, Commodities and Debt Markets Department at SberCIB Investment Research.
At the same time, the situation does not yet resemble a systemic debt crisis: defaults are primarily being recorded among companies with low credit ratings and high debt burdens, Sidorova said.
If a company fails to repay bond debt, it is given 10 business days to meet its obligations. If it fails to do so, the company may offer investors a restructuring—for example, by postponing payments in exchange for a higher interest rate.
The number of defaults will remain high in 2027, Sidorova believes.
High interest rates were a response to accelerating inflation in Russia. Domestic demand was outpacing production, Russia's Central Bank said in October 2023. Sanctions over the war and rising defense spending had also hit the economy and the ruble, which had lost about 25% against the dollar that year. The bank raised its key rate from 7.5% in the first half of 2023 to 15% by the fall.
Ukraine targets Russia's oil industry to weaken its war economy
Ukraine is also seeking to weaken Russia's economy as part of efforts to reduce its ability to finance the war. In particular, Defense Minister Yevhenii Khmara said strikes on oil refineries are aimed at "bleeding the Russian war machine" and destroying its military and economic potential. According to the ministry, the attacks have knocked out more than 51% of Russia's oil refining capacity.
In the first half of July, Russian oil refineries processed about 3.9 million barrels of oil per day—the lowest level since March 2005. Due to the production cuts, Moscow was also forced to restrict fuel exports.
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