Russia sells reserve gold for the first time in 25 years to finance Ukraine’s war deficit

Russia has begun selling physical gold from its central bank reserves for the first time in 25 years, as the government seeks to plug a growing budget deficit due to ongoing military spending, according to a report by Berlin-based news outlet bne IntelliNews.Regulatory data indicates that between 2022 and 2025, Russia sold gold and foreign currencies worth more than RUB 15 trillion ($150 billion), followed by an additional RUB 3.5 trillion ($35 billion) in just the first two months of 2026, the report noted. In January alone, the Russian Central Bank sold 300,000 ounces of gold, followed by another 200,000 ounces in February.

This step represents a major shift in reserve management. Earlier, gold transactions were largely theoretical, involving transfers between the Ministry of Finance and the Central Bank without physical movement of bullion.

However, in recent months, the central bank has begun selling actual gold bullion on the market.As a result, Russia’s gold holdings fell to 74.3 million ounces, their lowest level in four years. The 14 tons dumped in January and February is the largest two-month sale since the second quarter of 2002, when 58 tons were offloaded in a single tranche.The sales come at a time when Russia’s financial situation is under increasing pressure.

The Berlin-based BNE IntelliNews report indicated that the government ended 2025 with a budget deficit of 2.6 percent of GDP, compared to initial expectations of 0.5 percent. Economists estimate the actual deficit could be closer to 3.4 percent, with some payments deferred to 2026 to reduce the reported gap.Budget pressures intensified as oil prices fell in the second half of the year and US sanctions tightened, reducing the contribution of oil and gas tax revenues to about 20 percent of total revenues – roughly half of pre-war levels.The decision to sell gold was also affected by the sharp rise in bullion prices to more than $5,000 per ounce. The increase has pushed Russia’s international reserves to more than $809 billion as of February 28, including about $300 billion in frozen assets in the West, according to the Russian Central Bank. Of this amount, the value of gold reserves alone is estimated at approximately $384 billion.Russia currently owns more than 2,000 tons of gold, making it the fifth-largest sovereign owner in the world, according to data from the World Gold Council.

The country has built up these reserves over the years to reduce reliance on dollar-denominated assets, especially after sanctions imposed after the annexation of Crimea in 2014, which were further tightened after the invasion of Ukraine in 2022.Since 2022, the Ministry of Finance has relied on multiple financing channels to manage budget pressures. These measures include withdrawing from the National Welfare Fund, which still holds about RUB 4 trillion, increasing the issuance of domestic OFZ treasury bonds, and raising value-added tax rates, which account for about 40% of government revenues.The shift to selling physical gold suggests that Russia is now tapping its liquid reserves more directly, highlighting growing financial pressures as the conflict in Ukraine continues into its fourth year.