Russia’s corporate debt crisis is developing faster than expected, with the number of leading companies that represent two fifths of GDP in increased danger of going bankrupt, according to the Central Bank of Russia (CBR).

Sky high interest rates have driven up the cost of borrowing to painful levels just as economic growth fell close to nothing in the 3Q25 putting the top corporations under increasing pressure.

Last month the CBR identified “13 drowning men” amongst Russia’s leading non-financial companies that were facing liquidity problems, but has increased that number to 17 in its most recent financial stability assessment, The Bell reports.

The CBR has also stepped in to improve the liquidity of the banking sector to ensure banks have enough capital to deal with an anticipated rise in non-performing loans (NPLs). However, despite the growing pressure, CBR governor Elvia Nabiullina has assured the government that there is no danger of a banking or corporate debt crisis in the near future.

The results of the survey show that nearly 60% of corporate debt is now held by businesses struggling to service interest payments, up from an anticipated 34% by year-end.

“This is not just a technical adjustment,” The Bell said in a commentary. “The growing debt pressure reflects real stress in key sectors of the economy—despite efforts to downplay the severity through changes to sampling methodology.”

According to the Central Bank, companies with elevated interest burdens held 58.5% of Russian corporate debt in the first half of 2025. The share of companies classified as facing debt distress rose to 17 out of the 89 largest firms surveyed, up from 13 in the previous quarter. These companies collectively represent 39% of GDP, with total consolidated revenues of RUB78tn ($850bn).

The Central Bank attributed the increase in part to a revision in its methodology, but The Bell said the shift is “a reflection of broader structural weaknesses and mounting financial pressure across major industries.”

The names of troubled companies have not been disclosed, but The Bell previously identified the 13 largest problematic borrowers based on public financial statements, which include major players such as tech firm VK, e-commerce platform Ozon, United Aircraft Corporation (UAC), electronics retailer M.Video-Eldorado, and conglomerate AFK Sistema.

The state-owned giants of the Russian economy are also not immune. As bne IntelliNews reported, Russian Railways is seeking a bail-out to cover its RUB4tn ($50.8bn) debt pile. “The debt load is spreading from private to state sectors, and the scope for fiscal rescue is narrowing,” The Bell said.

The CBR uses an interest coverage ratio (ICR) to assess the stress — a metric that compares EBITDA to interest expenses. Companies with an ICR below 1 are unable to meet their debt obligations from operational profits. As of mid-2025, 8.1% of Russia’s major companies had an ICR below one. Strained sectors include retail, IT, real estate development, mechanical engineering, and the coal sector which is also already in crisis thanks to Western sanctions.

The outlook for 2026 also looks bad, according to the CBR. The best-case scenario has the key interest rate averaging 14% in 2026, which would see the proportion of firms with unmanageable debt burdens rise to 63.8%. In the worst-case scenario rates stay near the current level of 16.5% and 80.7% of firms would be in the debt “yellow zone”, says the CBR. while just 9.1% of companies remain in the “green zone” with manageable debt.

Nabiullina has been attempting an unorthodox policy of purposely cooling the economy using non-monetary policy methods in an effort to bring down persistent inflation, which was stuck at over 10% at the start of 2025. As she has no control over military spending, which continues to rise and is fuelling inflation, the regulator clamped down on everything else it could. The effect has been to see growth stall after two years of strong growth in 2023 and 2024, and was close to zero in the third quarter this year. However, at the same time inflation has been falling faster than expected in almost all of Russia’s regions, allowing the CBR to put in 450bp of rate cuts since the start of this year to the current 16.5% prime interest rate. According to the latest data from Rosstat, inflation dipped below 7% in November for the first time since March 2023.

Hopes that the CBR could continue its monetary policy easing in 2026 has been stymied by the government’s recent decision to hike VAT rates by 200bp to 22% in January to raise more money to cover a ballooning budget deficit that will stoke inflation. Sberbank CEO German Gref said in November the prime rate needs to be cut to at least 12% in 2026 to alleviate the pressures. Nabiullina has said that hiking VAT was the least inflationary measure available to the government to boost revenues as she tries to balance cutting inflation with reducing the debt pressure burden.

“There’s little room to manoeuvre,” The Bell said. “Inflation has slowed, but not enough to allow a meaningful rate cut. The Central Bank is caught between the risk of economic stagnation and the need to anchor inflation expectations. For businesses, this means a prolonged period of expensive borrowing and limited growth.”

The Russian economy faces various dangers as Nabiullina and Russian Finance Minister Anton Siluanov try to steer a course between the Cyanean rocks of stagnation and inflation. A debate over if the economy is already in a recession or merely cooling has restarted, while others say the danger of stagflation is looming.

“Ultimately,” The Bell concluded, “the private sector will bear the brunt of a monetary policy that is neither loose enough to stimulate investment and growth nor tight enough to restore confidence and reduce inflation.”