Russian Banks Face Cash Shortage, Struggling to Buy Government Debt

Russian banks are facing a cash shortage, with no spare ruble liquidity to buy government bonds used to finance the federal budget deficit, according to a senior Sberbank executive. This comes as the Finance Ministry faces a widening budget shortfall and may need trillions of rubles in additional borrowing this year. The federal budget recorded a deficit of 5.7 trillion rubles in the first half of 2026, with war-related expenditures potentially exceeding the budgeted amount by 4 trillion to 5 trillion rubles. The Central Bank may face growing pressure to provide funds to keep debt purchases flowing, as banks are increasingly short of liquidity and government bond auctions are suspended.