On 22 October the official portal published decree No. 702 of 20 October, eleven pages signed by the chairman of Crimea’s Council of Ministers, approving the republic’s debt policy for 2027 and the planning period 2028–2029. We read it in full this session. Most of it is the expected furniture — ceilings, risks, principles, a table of target ratios. One sentence in its second section is not:
“In accordance with clause 7 of the Rules, the main directions of the freed funds are determined as expenses actually incurred in 2024 and 2025 connected with the conduct of the special military operation.”
Two paragraphs later the document says how much money those “freed funds” are:
“In accordance with the Rules, in execution of order No. 1853-r of the Government of the Russian Federation of 10 July 2025, order No. 3015-r of the Government of the Russian Federation of 27 October 2025 and order No. 781-r of the Government of the Russian Federation of 8 April 2026, part of the debt on budget loans in the sum of 1,858.3 mln roubles was written off for the Republic of Crimea in 2025–2026.”
We have covered this write-off scheme twice: when decree No. 1095 widened its war clause in August, and when an order forgave 2.81 bn for the Belgorod region in October. In the Belgorod case the destination existed in one place only — a sentence the prime minister spoke at a meeting. The order itself said nothing. Here it is written into a region’s own normative act, published on the federal portal, and it carries a tense.
The clause that permits it
The Rules the decree cites are federal. Decree No. 79 of 1 February 2025 — twenty-three pages, which we also read this session — writes off two thirds of a region’s budget-loan debt as it stood on 1 March 2024, excluding loans for infrastructure projects, loans to top up the single budget account and loans from the temporarily free funds of the federal single account. Clause 6 defines the freed money as those two thirds and requires it to be directed by 2029 to a listed set of areas, with at least half going to housing-and-utilities infrastructure.
Clause 7 is the exemption from that list:
“A constituent entity of the Russian Federation whose estimated fiscal capacity in 2024 before equalisation does not exceed 0.65, calculated in accordance with article 131 of the Budget Code of the Russian Federation, has the right, without complying with the restrictions established by clause 6 of these Rules, to direct the freed funds in the form of investment expenses to the implementation of national projects … and also in the form of expenses connected with the conduct of the special military operation.”
That paragraph has stood in the Rules since February 2025. Decree No. 1095 of 28 August did not replace it: it added a second paragraph to the same clause 7, extending the war permission to regions whose capacity in 2026 did not exceed 0.9 and lifting the housing-and-utilities floor for them. Both paragraphs are now clause 7, and Crimea’s decree cites the clause without saying which one.
Its own dates point to the older tier. The single supplementary agreement that brought the republic into the scheme, No. 2025-00131/1, was signed on 2 April 2025, and Crimea’s statement of intentions for the freed money was approved by the regional-development commission’s presidium in a written vote, protocol No. 44pr, on 18 April 2025 — four months before No. 1095 existed. Whether Crimea’s fiscal capacity clears 0.65, or 0.9, is stated in none of the three documents we read.
The tense is the finding
Read the sentence again for when the money was spent. The freed funds are booked against expenses actually incurred in 2024 and 2025. The write-off itself runs 2025–2026. The Rules that authorise it are dated 1 February 2025. One of the two years named therefore ends before the scheme exists.
This is not a loophole a region found. The mechanism runs backwards by design, and we quoted the design from the Belgorod order three weeks ago: the federation cancels debt in the volume of funds actually directed by the region to permitted purposes. Clause 15 of the Rules, in the wording No. 1095 gave it in August, goes further and provides for confirming work and services performed “in reporting periods preceding the reporting year”. Retrospection is written in.
What Crimea’s decree adds is the content of that retrospection. The freed money bought nothing; it reimbursed something already bought. And what it names as the main item being reimbursed is the war.
Note the limit of the claim. “Main directions” is not “sole direction”, and the document gives no split: how much of the 1,858.3 mln went to war expenses and how much to anything else is not in it.
A region that borrows only from the centre
The same section supplies the balance sheet the sentence sits on. As of 1 October 2026, the decree says, Crimea’s consolidated budget has drawn no credits from credit institutions and issued no securities. The republic’s borrowing is all from the federal budget and the Federal Treasury: restructured 2017 budget loans of 4,040.2 mln roubles now falling due in 2029, infrastructure budget loans approved at 8,048.11 mln and drawn in four instalments from 2022 to 2025, a special treasury credit of 1,600.0 mln taken on 20 November 2023 for capital repairs to damaged sections of the Yevpatoria water conduit, and two further treasury credits of 536.66 mln and 625.04 mln in 2025.
Against that, the table of 2025 outturns in the same document shows a region sitting against its own ceiling. Its deficit came to 9.09% of revenue excluding gratuitous receipts, where the limit it set itself is 10.0. Debt service took 0.09% of spending against a limit of 5.0, and the ratio of commercial debt to own revenue was 0.0 against a target of 0.0 — there is no commercial debt to service. For 2027–2029 the appendix keeps all four targets where they are: deficit no more than 10%, securities and bank credit no more than 25% of own revenue, debt service no more than 5% of spending, annual repayment and service no more than 13%.
One comparison closes the section. By 1 January 2026, the decree says, Crimea had repaid 1,479.0 mln roubles of budget-loan principal on schedule, plus 24.6 mln of interest. The 1,858.3 mln forgiven in 2025–2026 is larger than both together.
Why a forgiven loan pays for a war
Nothing in this construction makes a cost disappear; it moves. Crimea’s books lose 1.86 bn roubles of debt. The federal budget gives up a repayment it was owed — and budget-loan repayments are one of the sources that finance the federal deficit, so what the centre loses is a receipt it had planned on. The spending those roubles are booked against was made by a regional budget, in 2024 and 2025, on the war. It appears in no federal expenditure line. On the federal side the cost shows up only as money that never came back.
That is the same mirror we described in August and again in October, with one piece now filled in from the paying side rather than the forgiving side.
What this means for the series we track
The consolidated regional balance stands at a deficit of 1.466 trillion roubles over the rolling year, scoring 33 of 100 against the 2021 surplus of 0.661 trillion and a registered trouble line at a 2.5 trillion deficit. A write-off does not move that reading: as our guide explains, the balance is a flow of revenue and spending, and a cancelled debt is neither. The federal deficit runs at 3.2% of GDP over twelve months, scoring 66 against the 2021 surplus of 0.34% of GDP and a trouble line at 10%. Nothing moves there either on 1.86 bn roubles against a 7.3 trillion rolling gap.
What the decree documents is a link, not a level: one more verified segment of how Russia finances the war through budgets that are not the defence budget. The strength index is 46 of 100, in the stress zone. This morning’s run moved no reading.
What we do not know
The share of the war in the sum. The decree calls war expenses the main directions of the freed funds and gives no figure for them. The 1,858.3 mln is the write-off, not the war bill.
What the expenses were. No category, no recipient, no programme line — only the years.
Whether Crimea clears the bar. Clause 7 is open to regions below 0.65 in 2024 or, since August, below 0.9 in 2026. Neither figure for Crimea appears in any document we read, and Minfin’s equalisation tables are unreachable from this environment.
The share of the debt. The decree never states the balance standing on 1 March 2024, which is the base the two-thirds formula works on, so what fraction of Crimea’s debt 1,858.3 mln represents cannot be computed from it.
How many other regions write it down this way. We have read one regional debt policy. Whether the same sentence stands in others is a question for the documents, not an inference from this one.