Russian President Vladimir Putin, right, shakes hands with Indian Prime Minister Narendra Modi. India is among the top borrowers from Russia. © Reuters
TOKYO — Russia is budgeting around 60% more for foreign financing next year than it did in 2021 — before its invasion of Ukraine — in an apparent bid to gain an edge in the competition for influence in regions such as the Middle East, Africa and South Asia.
But as Russia’s financing push to maintain its global influence is already seeing some loans go bad, Moscow could see growing dissatisfaction at home.
The 2025 federal budget passed in late November earmarks 500 billion rubles ($4.9 billion) for foreign lending, mainly to friendly countries. Similar sums are being allocated in 2026 and 2027, for a total of roughly 1.6 trillion rubles over three years.
The funds will be used for infrastructure and other development initiatives under bilateral agreements, with some expected to go toward imports of Russian energy and weapons.
Russia’s outstanding loans to other countries totaled $30.1 billion at the end of 2023, up 4% on the year and the highest since 1999, according to the World Bank. The top borrowers included nations with historically warm relationships with Moscow, such as Belarus at $7.7 billion, Bangladesh at $6.6 billion and India at $4.1 billion.
Russia has assisted with nuclear power plant construction in countries such as Bangladesh and Egypt.
India buys large amounts of oil and other energy resources from Russia, and has relied on Russian weapons since the Soviet era.
Russia delivered a frigate to the country on Dec. 9, according to Russian media. Indian Defense Minister Rajnath Singh met with Russian President Vladimir Putin the following day in Moscow to discuss defense cooperation.
Amid an intensifying tug of war over the Global South between the West on one side and Russia and China on the other, Moscow is looking to use development assistance to keep countries on its side.
As of 2019, Russia’s lending to developing economies was the fifth-highest in the world, behind only a few countries including China, Japan and Germany, according to the Natural Resource Governance Institute, a U.S. nonprofit.
In particular, Moscow has focused on South Asia, where debt to Russia accounts for around 2% to 3% of the total, United Nations data shows. Russia-tied debt in the combined region of Central Asia and Europe stands at a similar percentage.
With sanctions hitting the brakes on exports, Moscow is hoping that Russian companies can make up for the slump by selling to friendly nations in areas where they are internationally competitive, such as nuclear power and natural resources.
Loans to the developing world, however, carry greater risks, and Moscow is struggling with its own financial problems. Loan repayment by heavily indebted African countries has stalled. In 2023 Moscow granted Somalia relief on roughly $700 million in debt. Russia’s 2024 budget estimated income from debt principal and interest payments at 99 billion rubles, but the actual figure has been less than half that.
The protracted war in Ukraine has left Russia with less financial leeway elsewhere. The fall of Bashar al-Assad’s regime in Syria, which Moscow had propped up militarily and financially, came after Russia was forced to withdraw support from the country to focus its resources on the Ukraine conflict.
Defense spending makes up more than 30% of Russia’s 2025 budget. Cuts that Moscow is making to cover these costs, such as reducing pension benefits, are hitting its citizens, while updates to aging infrastructure in outlying areas have been delayed. Moscow choosing to boost overseas spending may fuel criticism that it is further neglecting its own domestic needs.
source : asia.nikkei