Brendan Cole
Russia is financing its military spending through a shadow plan that poses a "seismically disruptive" threat to an economy already buffeted by high inflation and interest rates, according to an analysis.
Craig Kennedy, a former Morgan Stanley investment banker, has described how the Russian state requires banks to issue preferential loans to military firms that are making President Vladimir Putin's war effort in Ukraine possible.
That gives the Russian economy a better bill of health, misleading experts into thinking that Putin can continue with record military spending without any adverse effects to the country's finances, according to Kennedy.
Newsweek has contacted by email the Russian Finance Ministry, Russia's central bank and Kennedy for comment.
Why It Matters
Despite facing tough sanctions, Russian state media said there is GDP growth forecast of 2.5 percent in 2025, but it comes amid a high inflation rate of 8.9 percent, which has been stoked by a worker shortage and a record key interest rate.
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