Faced with a colossal budget deficit and persistent Western sanctions, Moscow is ready to cross a historic milestone: issuing sovereign bonds denominated in yuan for the first time. More than a mere financial maneuver, this decision marks a strategic turning point towards a deliberate dedollarization and strengthened monetary integration with the BRICS. By betting on the Chinese currency, Russia aims both to stabilize its public finances and to structure a new circuit for its energy revenues outside Western channels.
In Brief
- •Russia is preparing to issue sovereign bonds denominated in yuan for the first time on its domestic market.
- •This decision aims to cover a massive budget deficit estimated at 5.7 trillion rubles, well beyond initial forecasts.
- •The country’s main tax revenues are collapsing, notably income from oil, gas, customs duties, and VAT.
- •Moscow seeks to attract a wide range of domestic investors amid ongoing active Western financial sanctions.
A Yuan Sovereign Debt to Curb a Spiraling Budget Deficit
While the BRICS Pay project advances despite tensions and technical obstacles, the Russian Ministry of Finance plans to issue sovereign bonds denominated in yuan on the domestic market for the first time.
With an amount of up to 400 billion rubles (about 4.9 billion dollars), this unprecedented operation is scheduled for December 8, 2025, with maturities ranging between 3 and 7 years. This choice is not incidental. It fits into an extremely tight budget context for Moscow, with a public deficit forecast at 5.7 trillion rubles (nearly 63 billion dollars), nearly five times the initial objective for the year.
Finance Minister Anton Siluanov reminded that "Previously, payments were made in dollars and euros, passing through Western banks which could suspend settlements at any time."
This initiative is also a direct response to the collapse of tax revenues. The ministry faced a significant drop in the main sources of state income:
- •-20 % decrease in oil and gas revenues year-on-year;
- •-19 % drop in customs duties;
- •-1.19 trillion rubles missing from the expected VAT collection;
- •-167 billion rubles deficit on corporate tax;
- •-440 billion rubles negative gap on eco-taxes.
Facing these difficulties, the government has intensified efforts to attract a broad range of domestic investors. They target the widest possible range, from banks to management companies to retail brokers.
Orders should begin to be registered as of December 2, ahead of the formal issuance. This offensive on the domestic market fills a strategic void left by Russia’s inability to access international capital due to Western financial sanctions.
A Monetary Strategy Serving the Geo-economic Interests of the BRICS
Beyond the budgetary necessity, issuing yuan-denominated bonds responds to a new monetary reality imposed by the reconfiguration of energy trade within the BRICS.
More and more Russian strategic players, such as Rosneft and Lukoil, receive their revenues in yuan, a direct consequence of energy contracts concluded with China. These major companies now seek to repatriate these currencies into the domestic economy before new American sanctions come into effect. The issuance therefore aims to offer these exporters a local investment solution in yuan, aligned with their cash surpluses.
The Russian market is not new to yuan debt, even if it had so far been limited to the private sector: 166 billion rubles of corporate bonds denominated in Chinese currency were already circulating before the announcement.
This first state borrowing thus marks a decisive step in creating a parallel financial ecosystem, where the dollar and euro are absent. In 2024, Sino-Russian bilateral trade reached a record $245 billion, with 99.1% of transactions settled in rubles or yuan. The Russian government has even expanded the maneuvering room for public companies, now allowing them to invest directly in the domestic bond market, thus strengthening local absorption of surpluses.
The great shift toward local currencies has begun, driven by political as well as structural choices. The Russian initiative marks another step toward a global monetary realignment, where the use of the dollar is no longer a given but one option among others.