Updated

Updated · spotmedia.ro · Jul 19

Russians Pull 1.56 Trillion Rubles Into Cash as Drone Disruptions and 22% VAT Fuel Tax Evasion

Updated

Updated · spotmedia.ro · Jul 19

Russians Pull 1.56 Trillion Rubles Into Cash as Drone Disruptions and 22% VAT Fuel Tax Evasion

Q: Amid internet shutdowns and a cash surge, are Russians being forced back into a pre-digital era?

Yes. Russians are not abandoning digital life by choice so much as being pushed into a more cash-heavy, less reliable system by wartime disruption, state internet controls and tax pressure. The clearest driver is repeated mobile internet shutdowns imposed after Ukrainian drone attacks. In major cities and many regions, outages have disrupted card payments, banking apps, ATMs, taxi services, deliveries and routine communication. That has made cash a practical backup. Central Bank data show 1.56 trillion roubles added to circulation since the start of 2026, with 550 billion roubles withdrawn in May alone, one of the sharpest jumps outside the pandemic. Similar spikes followed the 2022 mobilization and the 2023 Wagner mutiny, showing Russians turn to cash when the system feels unstable. This is also an economic story. Businesses are increasingly asking for cash to avoid higher taxes after VAT rose from 20% to 22% and thresholds for smaller firms were tightened. Sberbank says a growing share of cash is not returning to banks, a sign that more trade is moving into the shadow economy. That helps firms survive, but it weakens tax collection just as the state faces a widening budget deficit and slowing growth. So this is not a full return to a pre-digital era: e-commerce and online services still exist, and Russia remains digitally capable. But in everyday payments and basic routines, many Russians are being forced into analog habits because digital access is no longer dependable.

3 articles · Updated · spotmedia.ro · Jul 19

1.56 trillion rubles—about $20 billion—have moved into circulation since January, the biggest same-period cash increase since the pandemic, as Russians pull money from banks and rely more on notes.
550 billion rubles left bank accounts in May alone, including 200 billion from term deposits, as mobile internet shutdowns during Ukrainian drone attacks often knock out card payments and push people toward cash.
A VAT increase to 22% from January and a lower threshold for small firms have also driven pharmacies, restaurants and local shops to seek cash payments that stay off tax records.
6% of entrepreneurs told an Opora Russia survey they had used gray schemes, while Sberbank's finance chief warned under-the-table wages are returning and cash is not flowing back into the banking system.
The shift leaves Moscow chasing revenue for the war in Ukraine even as growth for 2026 is forecast at just 0.4%, exposing how security measures are undermining the Kremlin's own tax-collection drive.