For the first time in 20 years, Russia will be left without external public debt

According to official data from the Ministry of Finance of the Russian Federation, as of May 1, 2026, the state external public debt amounts to $33.8 billion in bond borrowings and $23 billion owed to non-residents. The total external debt of all sectors of the economy, according to estimates by the Bank of Russia, decreased in Q1 2026 by $10.5 billion to $308.8 billion.

This is similar to the situation in 2006, when after the early repayment of debts to the Paris Club the state’s external liabilities were reduced to a minimum. Since then, the share of external debt in the structure of public debt has not exceeded 10% of GDP, which remains one of the lowest figures among G20 countries today as well. According to the IMF, Russia’s total public debt at the end of 2025 amounted to 18% of GDP—an absolute minimum in the G20.

In global practice, the complete absence of external public debt is not a universal phenomenon. Even countries with excess reserves (China, Japan, the Persian Gulf countries) maintain external liabilities in order to support liquidity in international markets and integration into the global financial system. For developing economies, external debt has traditionally served as a tool for attracting technology and investment.

At the same time as external debt is shrinking, domestic debt is growing rapidly. By the end of 2025 it increased by 29.1% to 30.7 trillion rubles, and by June 1, 2026 it reached 32.9 trillion rubles. The IMF forecasts an increase in total public debt to 19.1% of GDP in 2026 and further to 29.1% by 2031. This reflects a strategic shift toward ruble financing of the budget deficit through the domestic OFZ market. However, отказ from external capital markets amid the high key rate of the Bank of Russia (14.25% after the cut in June 2026) increases the cost of servicing domestic debt and creates risks of overheating in the domestic financial market.

The Minister of Finance of the Russian Federation emphasized that Russia’s own financial infrastructure makes it possible to do without external borrowing. Indeed, under sanctions and limited access to Western capital markets, external borrowing is more political than economic in nature.

However, a complete отказ from external debt deprives Russia of an important instrument of foreign economic policy: the Ministry of Finance’s Eurobonds have traditionally served as an “anchor” for corporate borrowing and an indicator of the investment climate. In a situation where corporate external debt remains significant ($178 billion in other sectors according to the Bank of Russia as of April 1, 2026), the absence of sovereign Eurobonds on the market may increase borrowing costs for businesses.

Historical experience shows that countries that completely abandoned external debt (Turkmenistan, certain periods in the history of the USSR) lost flexibility in managing the balance of payments. The question is how sustainable the model of полного financial sovereignty will be amid ongoing geopolitical tensions and the need to diversify the economy.

Author: Doctor of Economics, Professor of the Department of World Economy and World Finance at the Financial University under the Government of the Russian Federation Galina Alekseevna Bunich.