Russians turn to cash, putting more strain on slowing wartime economy

What the report says

BBC World News reports that Russians are relying more heavily on cash as mobile internet shutdowns disrupt card payments and some businesses try to reduce their tax exposure amid growing wartime economic pressure. Citing Central Bank data it analysed, the BBC says cash in circulation has risen by 1.56tn roubles, about £14.8bn or $20bn, since the start of 2026 — the largest increase for the same period outside the Covid-19 era.

The report links the trend to repeated mobile internet restrictions across Russia following Ukrainian drone attacks. Russian authorities say the shutdowns are intended to counter those strikes, but the disruptions can leave customers unable to use card terminals. The BBC also notes earlier wartime jumps in cash demand, including after the September 2022 partial mobilisation and during the Wagner mutiny in June 2023.

The shift matters for Russia’s public finances because cash transactions can be harder to track. The BBC reports that pharmacies, restaurants, salons and small shops are increasingly encouraging cash payments as higher taxes and a slowing economy squeeze margins. Russia raised VAT from 20% to 22% in January and lowered the threshold for small and medium-sized firms to pay it. A May survey by Opora Russia, the country’s largest SME association, found about 6% of entrepreneurs said they had used “grey schemes” to cope with the tax burden.

The BBC adds that the trend comes as Moscow faces a wider budget deficit and weaker growth. Russia’s economy ministry cut its 2026 GDP growth forecast in May to 0.4%, which would be the weakest expansion since 2022.