Russia on brink of economic ‘collapse’ as bank accounts to be frozen and food rationed

Vladimir Putin is reportedly considering proposals to freeze Russian bank accounts and introduce food rationing in an attempt to prevent an economic collapse.

have been hit hard by rising and food inflation that has seen prices for staple items explode.

Potato prices rose by almost 95% between November 2023 and 2024, while butter shot up by 36.5%.

The steep increase in food has led to a from supermarkets and grocery stores around the country, most notably for butter.

Meanwhile, stand at a record high of 21%, heaping huge pressure on companies over-leveraged on previously cheap bank loans.

The worsening economic outlook has forced the Kremlin into considering drastic proposals to stem the crisis.

Some of the measures up for consideration include preventing withdrawing their deposits from banks and issuing food cards, according to the Telegram Channel General SVR.

“Many members of the Politburo agree that the freeze is necessary, but they are in no hurry to introduce this measure and are trying to postpone the adoption of the final decision as much as possible,” the channel reported.

“On the other hand, they cannot miss the critical moment when this measure ceases to be effective and the crisis goes according to the worst scenario, the end of which will be the ‘collapse of the financial system’ of the country.

“We have already reported that the Russian leadership is going to block bank deposits, exchanging deposits for bank shares and prohibiting the sale of these shares for a year.

“Food cards are on the way and a decision on this issue will be made on the weekend.”

General SVR emerged in 2020, claiming to be run by former and current members of the Russian Foreign Intelligence Service, as well as other state bodies.

In a statement to , a spokesperson declined to identify the channel’s sources, citing personal security, but said they had “complete confidence” in them.

An analysis carried out by a former Morgan Stanley investment banker has highlighted that the could face a corporate and banking collapse with its continued military spending.

approved a record-breaking defence budget, setting aside 32.5 percent of the government’s total spending for 2025, worth US$126 billion.

Craig Kennedy said has followed a two-track strategy to fund its war via its defence budget expenditures as well as an off-budget plan of similar size enabled by a law enacted on February 25, 2022, which compels Russian banks to give preferential loans to military-related businesses.

In that period, has faced a 71% expansion in corporate debt worth US$415 billion or 19.4% of GDP – higher than oil and gas revenues and defence budget expenditures, Kennedy said in his Navigating newsletter.

That means ‘s total war costs “far exceed” what official budget expenditures would suggest.

This off-budget defence funding was harder to sustain during the second half of 2024, spiking inflation and pushing up for “real” economy borrowers to above 21%, “creating the preconditions for a systemic credit crisis,” Kennedy said.

Commenting on Kennedy’s findings, the said that Putin “sits on a ticking financial time bomb of his own making” and that Kyiv’s allies must deny Moscow greater access to external funds.