Russia considers debt relief to support struggling railway giant

Tuesday 25 November 2025 - 17:20

By: Dakir Madiha

Russia considers debt relief to support struggling railway giant

Russia is evaluating a rescue package for its state-owned rail company, Russian Railways, which faces an overwhelming debt burden of 4 trillion roubles ($51 billion). The company, the country’s largest commercial employer with 700,000 staff, has seen revenue decline amid a slowdown in the wartime economy, while servicing costs have soared due to rising interest rates not seen in two decades.

Officials are discussing several options to alleviate the financial strain, including raising cargo tariffs, increasing subsidies, cutting taxes, or using funds from the National Wealth Fund. A key proposal involves capping the interest rates on the company’s debt at 9% or converting a portion of the debt into equity, potentially giving state banks ownership stakes. One suggestion targets converting 400 billion roubles of debt into shares, which could save around 64 billion roubles in interest payments over three years.

Financial reports reveal that by mid-2025, Russian Railways had net debt of 3.3 trillion roubles, including 1.8 trillion in short-term liabilities, with an unexplained increase of about 700 billion roubles in just six months. This mounting debt reflects broader economic pressures in Russia's state-controlled wartime economy, where deeply indebted large companies are forcing the government to shoulder growing financial burdens.

The railway giant operates the world’s third-largest network and is often viewed as an economic barometer for Russia. The country’s economy contracted in early 2025 and is projected to grow only around 1% this year, down sharply from 4.3% in 2023. Industry leaders warn of continued economic cooling and a weak business environment extending over the next four to five quarters, complicating the outlook for Russian Railways and the broader economy.