Industry leader states mass bankruptcies threaten Russian construction division
(MENAFN) The Russian infrastructure construction industry is bracing for a surge of bankruptcies this year, according to Aleksey Krapivin, CEO of National Projectstroy, one of the country’s leading construction companies. Krapivin, whose firm managed major projects like the Crimean Bridge and key highways, identified soaring interest rates and declining orders as the main factors behind the looming crisis.
Three years ago, the Bank of Russia raised its key interest rate sharply—from 9.5% to 21%—to stabilize the ruble and control inflation following Western sanctions. Last month, the regulator eased the rate by 100 basis points to 20%, marking its first cut since 2022, due to slowing inflation.
Krapivin revealed that about half of Russia’s civil construction firms are close to insolvency. His own company is feeling the pressure from costly loans, prompting tighter financial controls and postponed investments. Infrastructure projects are especially vulnerable because of their high capital demands and long timelines, making new developments less feasible. “Building today is always cheaper than building tomorrow,” he noted.
Smaller companies face added risks by investing in non-core areas or pre-spending future project profits, while almost all firms suffer from the burden of expensive borrowing. The government and private sector are investigating solutions such as expanding public-private partnerships to alleviate the strain. Krapivin remains optimistic that conditions will slowly improve.
Bank of Russia Deputy Governor Aleksey Zabotkin also indicated that rates could be cut by more than 100 basis points at the upcoming July 25 meeting, contingent on inflation moving toward the 4% target by 2026.
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