The crisis in Russia is reaching the heart of the arms industry. A drop in orders and payment backlogs are strangling the company. Even state giants stop paying on time
In a February letter to then-deputy governor Andrei Sanosyan (who left office 10 days ago), the Nizhnonovgorod Association of Industrialists and Entrepreneurs (NAPP) lists a number of problems. Particular attention is paid to the sharp decline in capital investment, profits, orders and production over the past year.
The association, which conducted a survey among over 50 regional companies from the defense and civil sectors, as well as 70 companies from the Volga region, calls for the resumption of investments, the restoration of preferential interest rates on loans and the acceleration of payment of liabilities. The letter cited state-owned enterprises as some of the main culprits behind payment delays, including those working in support of the war — Rostec, the United Shipbuilding Corporation, Roscosmos and Rosatom.
NAPP is calling on local authorities to raise these issues with the federal government. This one though does not plan to increase military spending this year. It is true, however, that in previous years they were usually higher than assumed in the budget, and in 2025 they increased by 30%.
The government set the budget deficit for this year at 3.8 trillion rubles (PLN 175,765 million). However, on Wednesday, Finance Minister Anton Siluanovadmitted that the budget would have to be revised “within a few weeks” due to falling oil prices. This means a reduction in revenues and an increase in the deficit.
Regional authorities are also unlikely to be able to seriously help businesses financially. In 2025, their total budget deficit increased 3.6 times, reaching a record level of 1.478 trillion rubles (PLN 68,363 million), as calculated by the AKRA rating agency based on data from the Russian Ministry of Treasury.
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The regions did not obtain a key tax for them – the tax on corporate profits: due to the deterioration of the economic situation, its revenues fell by nine percent. compared to 2024, i.e. by 493 billion rubles (PLN 22,803 million).
The authorities of the Nizhny Novgorod region expect a deficit of almost 30 billion rubles (PLN 1,388 million) this year, which will be partially covered by federal funds.
Meanwhile, companies in the region complain that they have run out of subsidized loans and are forced to borrow at commercial rates of more than 20 percent. Companies lack not only investment capital, but also working capital, because the debt of contractors to them exceeded 100 billion rubles (PLN 4,625 million). Financial problems are spreading through the supply chain as major customers, including defense companies, delay payments.
The specter of production and staff reductions
According to a survey of regional enterprises attached to the NAPP letter, if the situation does not improve, in the second half of the year approximately 20,000 people may lose their jobs in the region. people. According to the documents, several large companies, including those considered systemically important, have already shortened working hours in order to reduce costs.
As the situation continues to deteriorate, many companies may soon run out of cash reserves, forcing them to production reductions and staff reductionsand in the worst case – to declare bankruptcy, entrepreneurs warn.
Meanwhile, last year Rosstat recorded almost 100% employment in the Nizhny Novgorod region, and the governor of the region, Gleb Nikitin, reported a real wage increase of 7.2%. in the first 10 months.
However, over the course of 2025, the number of companies in the civil sectors that recorded a decline in orders increased from 57.1%. in the first quarter to 69.2 percent in the fourth quarter. In the arms sector, the situation is slightly better: the number of such companies decreased, but at the end of the year it was still 30%. (compared to 50% at the beginning).
At the same time, 60 percent enterprises from the defense sector reported a decline in investments at the end of last year compared to 2024. In the civilian sector, in the second and third quarters, this percentage was 100%, and in the fourth quarter – 92.3%.
I’m Ashley Davis as an editor, I’m committed to upholding the highest standards of integrity and accuracy in every piece we publish. My work is driven by curiosity, a passion for truth, and a belief that journalism plays a crucial role in shaping public discourse. I strive to tell stories that not only inform but also inspire action and conversation.
