Russian businesses are facing increasing financial distress, with a notable rise in bankruptcy filings reported in the early months of 2024. The Russian business daily Kommersant reported a significant uptick in these cases, citing data from the federal register for bankruptcy.
In January alone, the number of companies declaring bankruptcy climbed to 571, a 57% increase from the 364 reported in the same month of the previous year. February witnessed a further increase, with 771 companies filing for bankruptcy, representing a 60% hike from the 478 cases recorded a year earlier.
Economic Challenges Amid Moratorium Expirations
This surge in bankruptcies comes after Russia lifted moratoriums on such filings, which were initially introduced during the COVID-19 pandemic in 2020 and later extended due to the sanctions imposed on Russia following its invasion of Ukraine in 2022. These moratoriums had expired by late 2022, leading to a return to pre-pandemic levels of bankruptcy filings, according to Ilya Torosov, Russia’s first deputy economy minister.
Despite reports of economic growth, with Russia’s GDP growing 3.6% in 2023, the increase in corporate bankruptcies paints a contrasting picture of on-the-ground economic realities. The Bank of Russia has raised interest rates to 16% in an effort to curb inflation, impacting companies’ ability to refinance. The broader economic landscape is further complicated by sanctions and trade restrictions from the West, alongside internal fiscal policies aimed at funding governmental promises of lifestyle improvements ahead of the presidential elections set for March 15 to March 17, 2024.
These factors contribute to the financial challenges faced by Russian companies, leading to the observed spike in bankruptcy filings.
