Russian Businesses Adopt ‘Tactical Poverty’ Measures, Signaling Growing Economic Stress 

“Tactical poverty” is what Russians are calling the belt-tightening measures Russian companies have been compelled to impose amid poor economic indicators for 2026. According to the Russian business outlet RBK, the forecasts are causing concern in the private sector as economic growth is stunted by the demands of the Kremlin’s ongoing invasion of Ukraine.

On January 19, the International Monetary Fund (IMF) slashed its 2026 growth forecast for Russia to a mere 0.8 percent. The forecast coincided with a sharp decline in Russian oil revenue, thanks in part to U.S. sanctions, though Washington still has room to tighten those restrictions.

Converging Crises Hit Russian Businesses

Russian businesses are showing visible deterioration in their balance sheets, which are expected to worsen. According to RBK, firms are freezing wage indexation and cutting bonuses to prepare for harder times ahead, citing problems such as rising taxes, inflation, and reduced demand.

The Institute for Economic Forecasting of the Russian Academy of Sciences had already warned of a weaker 2026 last December. “All key risks to the Russian economy’s development have materialized in 2024-2025,” its forecast stated. These risks include “unfavorable demographic trends, labor shortages, widening technological gaps as compared to developed countries and China, declining hydrocarbon export revenues and resource rents, increasing defense burden, and intensifying sanctions pressure.” The institute predicted that tight monetary and fiscal policy would continue to dampen growth this year.

Expanded U.S. Sanctions Cut Russian Oil Revenues

Russian federal revenues from oil and gas fell to a five-year low in 2025, declining 24 percent from the previous year amid reduced crude prices. This drove the budget deficit up to 2.6 percent of GDP.

Tougher U.S. sanctions have added to Moscow’s woes. In October, the Treasury Department sanctioned Russian energy giants Rosneft and Lukoil, after having targeted two smaller oil firms, Gazprom Neft and Surgutneftegas, in the final days of the Biden administration. Combined, these companies accounted for nearly 70 percent of Russia’s crude exports in the first half of 2025.

As a result, Russia’s oil export volumes have dipped, while the discounts on Russian shipments have widened. In December, Russian federal budget revenues from oil and gas fell by approximately 44 percent year over year. These are on track for a 46 percent year-over-year decrease in January, according to calculations by Reuters.

Shifting the War’s Burden

Russia’s economic stressors are stacking up in 2026. Unable to ignore the declining revenue from the oil and gas sectors, which serve as the budget’s shock absorber, the Kremlin is leaning harder on higher taxes to finance its enormous military spending, which Defense Minister Andrei Belousov stated was 7.3 percent of GDP in 2025. This year, Moscow increased the value-added tax (VAT) from 20 to 22 percent. To battle persistently high inflation, the central bank keeps monetary policy tight with a key rate of 16 percent, drawing protests from business leaders such as billionaire Oleg Deripaska.

Regional budgets in state-dependent, economically stressed areas are reportedly delaying public-sector wage payments. With a larger deficit and a weaker energy-revenue cushion, the Kremlin has less room to protect firms and households while sustaining war spending, pushing more of the adjustment down onto corporate balance sheets and living standards.

Russia can keep funding its war, but doing so will shift more of the financial burden onto households and businesses — turning “stability” into stagnation, rationing, and a steady rise in corporate distress.

U.S. Should Intensify Sanctions

As a lever of pressure on the Kremlin as negotiations of Ukraine continue, the Trump administration should concentrate on throttling Russia’s energy revenues. This should include coordinating with U.S. allies to impose comprehensive sanctions on Russia’s “shadow fleet” of oil tankers. The Treasury Department should also aggressively punish foreign companies who violate Russia oil sanctions along with market newcomers that have increased their share of Russian oil exports since October. Finally, Washington should consider expanding its sanctions to include the infrastructure bringing Russian oil to market.

The more Washington can squeeze Russia’s economy and budget, the more leverage President Trump will have to negotiate a just peace in Ukraine.

Keti Korkiya is a research analyst in the Russia Program at the Foundation for Defense of Democracies (FDD), where Dmitriy Shapiro is a research analyst and editor. For more analysis from the authors and FDD, please subscribe HERE. Follow FDD on X @FDD. FDD is a Washington, DC-based, nonpartisan research institute focusing on foreign policy and national security.