The War Has Squeezed Infrastructure Out of the russian Budget

Over the course of five months, the overdue loan debt of 22 major russian infrastructure companies has more than doubled – to nearly 9 billion rubles. Banks are refusing to grant them new loans or extend bank guarantees, even if the companies have a clean credit history.

As of the end of August 2026, these contractors’ total accounts payable had increased by 16%, to 495 billion rubles, while their loan debt had risen by 11.8%, to 191 billion rubles.

The industry is suffering from cuts in budget spending and a lack of large contracts. In January–September, regional spending on infrastructure construction fell by 19.1%, to 1 trillion rubles. Federal funding for relevant national projects increased by only 3.1%.

The downturn has affected the entire construction industry. From January through August, the volume of work completed, in constant prices, decreased by 2.9% to 11.1 trillion rubles. In the urals, the decline was 12.1%; in the north caucasus – 11.9%; and in southern russia – 7.3%.

Contractors are also suffering from delays in government payments. To cover cash flow gaps, they are taking out loans at a key rate of 14%, while the actual cost of borrowing is even higher. Banks consider road construction a risky venture and are reluctant to finance even companies with no delinquent debts.

The consequences have already affected government contracts. Clients have unilaterally terminated 18 contracts totaling 80.5 billion rubles. Further cuts in funding threaten new contract terminations, contractor bankruptcies, and delays in construction schedules.

Over the next six to nine months, contractors’ overdue debt will only continue to grow. In 2027, funding for national infrastructure projects will be cut, as budget funds are redirected to the war against Ukraine.