Russia hopes selling sovereign debt to foreign states will cover costs of Ukraine war, MOD says

Russia has moved to selling sovereign debt in foreign currencies and is "almost certainly" anticipating financial support from "friendly" foreign states, the Ministry of Defence (MOD) has said.

In the latest defence update, the MOD said Russian Prime Minister Mikhail Mishustin called the move "under development".

They also added once the development is "completed, investors from other countries will be able to purchase Russia's sovereign debt and therefore finance some of Russia's future budget shortfalls".

• How could Ukraine take back Crimea from Russia?
• Russia trying to revive reputation of brigade associated with failure in Ukraine, MOD says
• Russia looking to develop replacement for Wagner Group in Ukraine, MOD says

"Such investors would be indirectly financing Russia's invasion of Ukraine," the MOD said.

"In recent months, Russia's own banks have been the main entities purchasing Russian state debt. 

However, they are unlikely to have the capacity to fully fund anticipated future budget deficits.

"Russian officials likely see external debt issuance as one way to plug gaps in Russia's finances as they plan for a long war in Ukraine.

"However, it remains unclear whether Russia will succeed in implementing the measures."

It comes after another recent defence update said Russia was looking to replace the Wagner Group in Ukraine.

The mercenary group has made the headlines fighting for Russia in Ukraine since the invasion last year, but the MOD said Russia was looking to find a replacement group it had more "control" over.