The North Caucasus region of Ingushetia now has a "red" rating from the Finance Ministry, which means Moscow may take direct control over its debt management. Ingeshutia is approaching bankruptcy, with a debt of over 125% of its annual income. It was already one of the most subsidized regions in Russia, receiving over 80% of its annual budget from the central government. More regions are expected to approach bankruptcy in the near future as the pandemic drags on, but the Russian government remains reticent to stimulate the economy with its cash reserves stored in the National Wealth Fund. It is believed that these reserves are being saved to prepare for a Biden presidency which promises to be tough on Russia, both economically and politically.
The pandemic has exacerbated Russia's regional debt crises, forcing the national government to provide significant additional funding. Even in a normal year, Russia's regional governments struggle to balance the books, as their only revenue comes from personal income and corporate taxes. The national government is able to generate revenue from state-adjacent oil and gas companies, but regions must make up budget shortfalls by borrowing and receiving federal transfers. Though regional economies improved during the summer, the impending second wave of the coronavirus threatens to hit even harder than the first did, which will create a significant economic impact especially for less well-connected regions and those dependent on oil and gas prices. This raises questions for the recovery of the Russian economy, which the government has so far been positive about.
