RZD Struggles to Stabilise Finances Amid Russian War and Economic Crisis

Burdened by an astronomical $50 billion debt, the Russian government has ordered the Russian Railways (RZD) to sell its headquarters in central Moscow. The strategic operator, squeezed by Western sanctions and record interest rates, is facing a deepening crisis.

The state-owned railway monopoly RZD is grappling with severe financial difficulties. The Russian government has instructed the company to sell its landmark high-rise building in central Moscow. Proceeds from the sale are intended to help service a debt that has reached an estimated $50 billion (more than €46 billion), according to Reuters.

📉 Gov. orders 🇷🇺 Railways to offload 62-floor Moscow Towers for at least 193.1 bn rubles to tackle $50bn debt

This forced sale highlights fiscal desperation—specialist Janis Kluge points to broader revenue droughts, with oil/gas taxes down 21% pushing systemic shortfalls

12/25 pic.twitter.com/2TTvSpygNo

— 𝐀𝐧𝐧𝐚 𝐊𝐎𝐌𝐒𝐀 | 🇪🇺🇫🇷🇵🇱🇺🇦 (@tweet4Anna_NAFO) December 20, 2025

Economic Fallout from the Russian War in Ukraine and High Interest Rates

RZD, which employs approximately 700,000 people and ranks among the country’s largest employers, has been caught in a squeeze of adverse economic pressures. According to Reuters, the main drivers include:

• Falling revenues: A result of disrupted trade routes and the broader economic consequences of Russia’s unprovoked invasion of Ukraine.
• Expensive borrowing: Debt servicing costs have surged following sharp interest-rate hikes by the Russian central bank.
• International sanctions: Restricted access to global capital markets has complicated the refinancing of existing liabilities.

Decision Taken at Government Level

The sale of the skyscraper was approved during a closed government meeting in mid-December. However, the divestment is widely viewed as only a partial measure aimed at stabilising a strategic company under strain. The situation is serious enough that the Kremlin is reportedly considering more radical options.

"No decisions have yet been taken on further measures such as raising freight tariffs or providing direct state subsidies. However, the option of converting part of the debt into equity remains on the table," sources close to the Russian government note.

While the sale of the prestigious headquarters will provide an immediate cash injection, the long-term stability of Russian Railways remains uncertain. Without a broader debt restructuring or significant tax relief, the state may ultimately be forced to inject additional billions from the federal budget to keep critical rail infrastructure operational.