Russia is exploring multiple options to prop up Russian Railways, the country’s largest commercial employer, which has accumulated a staggering 4 trillion rouble ($50.8 billion) debt, sources told Reuters. The state-owned company, responsible for transporting passengers, oil, and cargo across Russia’s vast territory, has seen revenues decline amid a slowdown in the war-driven economy, while interest costs have surged to their highest levels in two decades.
According to two people familiar with the matter who spoke on condition of anonymity, the Russian government has discussed measures including raising cargo prices, increasing subsidies, cutting taxes, or deploying money from the National Wealth Fund. Officials held meetings in late November and plan to reconvene in December to further evaluate the situation. Some additional proposals, yet to be formally considered, involve capping interest rates at 9% or converting portions of the debt into equity, effectively giving state banks a stake in Russian Railways. One source suggested that 400 billion roubles of debt could be swapped for shares as part of this strategy.
Russian Railways, which employs about 700,000 people and operates the world’s third-longest railway network, reported revenues of 3.3 trillion roubles and expenditures of 2.8 trillion roubles for 2024 under international accounting standards. By June 2025, the company’s net debt stood at 3.3 trillion roubles, including 1.8 trillion roubles of short-term debt, reflecting a surge of roughly 0.7 trillion roubles in just six months. Analysts note that the company’s financial struggles mirror broader challenges in Russia’s state-dominated war economy, where heavily indebted, strategically vital firms often leave the government liable, even as military spending remains high.
The country’s economic slowdown compounds these pressures. Russia’s nominal GDP of $2.2 trillion is roughly unchanged since 2013, and growth is forecast to fall to around 1% in 2025 from 4.3% in 2024. The International Monetary Fund has downgraded its forecast to 0.6%, while domestic officials acknowledge that investment challenges and high interest rates are weighing on the economy. Yet President Vladimir Putin has maintained that the economy has performed better than expected under extensive Western sanctions, emphasizing that the Kremlin prioritizes the war effort over economic growth.
The plight of Russian Railways underscores the broader tension in Russia’s economic model: balancing the needs of large, state-linked corporations with military objectives, all while navigating international sanctions and domestic economic stagnation. As Reuters reports, Moscow’s deliberations over subsidies, debt restructuring, and equity conversions will be closely watched as a barometer of the government’s ability to manage its most important industries amid continued economic cooling.
