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The patchwork plains of Castilla-La Mancha, in central Spain, were once known for their windmills.

But now it is wind turbines, their modern-day equivalent, which are much more visible on the region’s skyline.

The 28 vast turbines of the Sierra del Romeral windfarm, perched on hills not far from the historic city of Toledo, look out over this landscape.

Operated by Spanish firm Iberdrola, they are part of a trend that has accelerated Spain’s renewable energy output over the past half-decade, making the country a major presence in the industry.

Spain’s total wind generation capacity, its prime renewable source in recent years, has doubled since 2008. Solar energy capacity, meanwhile, has increased by a factor of eight over the same period.

This makes Spain the EU member state with the second-largest renewable energy infrastructure, after Sweden in first place.

Earlier this year, Spain's Socialist Workers' Party prime minister, Pedro Sánchez, described his country as "a driving force of the energy transition on a global scale".

The boom began soon after the arrival of a new government under Mr Sánchez in 2018, with the removal of regulatory obstacles, and the introduction of subsidies for renewable installation. The pandemic further accelerated the trend on a domestic level.

"The impact of Covid was very positive for our sector," says José Donoso, chief executive of UNEF, the Spanish Photovoltaic Association, which represents the solar panel sector. "People saved money, took time to think about what to do with it, and many of them decided that it was better invested on their roof than in their bank."

Meanwhile, the government introduced ambitious new targets, including covering 81% of Spain’s electricity needs with renewables by 2030.

However, behind this success story, there are concerns within the electricity industry caused by an imbalance between supply and demand with, at times, a surplus of electricity.

Even though the Spanish economy has bounced back strongly from the trauma of the Covid pandemic, and is growing faster than all of the bloc’s other big economies, electricity consumption has been dropping in recent years.

Last year, demand for electricity was even below that seen in the pandemic year 2020, and the lowest since 2003.

"What we saw until 2005 was that when GDP increased, demand for electricity increased more than GDP," says Miguel de la Torre Rodríguez, head of system development at Red Eléctrica (REE), the company that operates Spain's national grid.

More recently, he says, "we've seen that demand has increased less than GDP. What we're seeing is a decoupling of energy intensity from the economy".

There are several reasons for the recent drop in demand. They include the energy crisis triggered by Russia's invasion of Ukraine in 2022, which caused businesses and homes across Europe to cut back on usage.

Also, energy efficiency has improved and become more commonplace.

The increased usage of renewable energy has also contributed to the reduction in demand for electricity from the national grid.

Mr Rodríguez says that during daylight hours, when solar energy output is particularly strong, the supply-demand balance can be pushed out of kilter, having an impact on prices.

"Since the power system always has to have an equilibrium – demand has to equal generation – that has meant there has been excess generation during those hours," he says.

"That has driven prices down, especially during certain hours, when the prices have been zero or even negative."

While such low prices are welcome for consumers, they are potentially a problem when it comes to attracting investment to the industry.

"This can make it more difficult for investors to increase their investment in new electricity based on renewable energies," says Sara Pizzinato, a renewable energy expert at Greenpeace Spain.

"That can be a bottleneck for the energy transition."

Concerns about Spain having an excess of electricity have led to discussion of the need to accelerate the "electrification" of the economy, which involves moving it away from fossil fuels. The Sánchez government has set a target of making 34% of the economy reliant on electricity by 2030.

"This process is going slowly, and we need to accelerate it," says UNEF’s José Donoso.

"Electricity is the cheapest and most competitive way to produce clean energy.

"We need facilities that use electricity in place of fossil fuels."

Shifting to a total reliance on electricity is seen as unrealistic, as some important sectors like chemicals and metals will find the transition difficult.

However, Mr Donoso and others see plenty of scope for swifter electrification. For example, Spain is trailing many of its European neighbours when it comes to the installation of heat pumps in homes, and the use of electric cars, which only make up around 6% of vehicles on the road.

Ms Pizzinato agrees that electrification is crucial, but says there are other ways of tackling the supply-demand quandary, including phasing out the use of nuclear plants more quickly, and increasing energy storage capability.

She says: "We need to engage more people and more industries in demand-side management, to make sure the flexibility needed in the system is out there to make generation and demand match better during the day and during the night."

The patchwork plains of Castilla-La Mancha, in central Spain, were once known for their windmills.

But now it is wind turbines, their modern-day equivalent, which are much more visible on the region’s skyline.

The 28 vast turbines of the Sierra del Romeral windfarm, perched on hills not far from the historic city of Toledo, look out over this landscape.

Operated by Spanish firm Iberdrola, they are part of a trend that has accelerated Spain’s renewable energy output over the past half-decade, making the country a major presence in the industry.

Spain’s total wind generation capacity, its prime renewable source in recent years, has doubled since 2008. Solar energy capacity, meanwhile, has increased by a factor of eight over the same period.

This makes Spain the EU member state with the second-largest renewable energy infrastructure, after Sweden in first place.

Earlier this year, Spain's Socialist Workers' Party prime minister, Pedro Sánchez, described his country as "a driving force of the energy transition on a global scale".

The boom began soon after the arrival of a new government under Mr Sánchez in 2018, with the removal of regulatory obstacles, and the introduction of subsidies for renewable installation. The pandemic further accelerated the trend on a domestic level.

"The impact of Covid was very positive for our sector," says José Donoso, chief executive of UNEF, the Spanish Photovoltaic Association, which represents the solar panel sector. "People saved money, took time to think about what to do with it, and many of them decided that it was better invested on their roof than in their bank."

Meanwhile, the government introduced ambitious new targets, including covering 81% of Spain’s electricity needs with renewables by 2030.

However, behind this success story, there are concerns within the electricity industry caused by an imbalance between supply and demand with, at times, a surplus of electricity.

Even though the Spanish economy has bounced back strongly from the trauma of the Covid pandemic, and is growing faster than all of the bloc’s other big economies, electricity consumption has been dropping in recent years.

Last year, demand for electricity was even below that seen in the pandemic year 2020, and the lowest since 2003.

"What we saw until 2005 was that when GDP increased, demand for electricity increased more than GDP," says Miguel de la Torre Rodríguez, head of system development at Red Eléctrica (REE), the company that operates Spain's national grid.

More recently, he says, "we've seen that demand has increased less than GDP. What we're seeing is a decoupling of energy intensity from the economy".

There are several reasons for the recent drop in demand. They include the energy crisis triggered by Russia's invasion of Ukraine in 2022, which caused businesses and homes across Europe to cut back on usage.

Also, energy efficiency has improved and become more commonplace.

The increased usage of renewable energy has also contributed to the reduction in demand for electricity from the national grid.

Mr Rodríguez says that during daylight hours, when solar energy output is particularly strong, the supply-demand balance can be pushed out of kilter, having an impact on prices.

"Since the power system always has to have an equilibrium – demand has to equal generation – that has meant there has been excess generation during those hours," he says.

"That has driven prices down, especially during certain hours, when the prices have been zero or even negative."

While such low prices are welcome for consumers, they are potentially a problem when it comes to attracting investment to the industry.

"This can make it more difficult for investors to increase their investment in new electricity based on renewable energies," says Sara Pizzinato, a renewable energy expert at Greenpeace Spain.

"That can be a bottleneck for the energy transition."

Concerns about Spain having an excess of electricity have led to discussion of the need to accelerate the "electrification" of the economy, which involves moving it away from fossil fuels. The Sánchez government has set a target of making 34% of the economy reliant on electricity by 2030.

"This process is going slowly, and we need to accelerate it," says UNEF’s José Donoso.

"Electricity is the cheapest and most competitive way to produce clean energy.

"We need facilities that use electricity in place of fossil fuels."

Shifting to a total reliance on electricity is seen as unrealistic, as some important sectors like chemicals and metals will find the transition difficult.

However, Mr Donoso and others see plenty of scope for swifter electrification. For example, Spain is trailing many of its European neighbours when it comes to the installation of heat pumps in homes, and the use of electric cars, which only make up around 6% of vehicles on the road.

Ms Pizzinato agrees that electrification is crucial, but says there are other ways of tackling the supply-demand quandary, including phasing out the use of nuclear plants more quickly, and increasing energy storage capability.

She says: "We need to engage more people and more industries in demand-side management, to make sure the flexibility needed in the system is out there to make generation and demand match better during the day and during the night."

The patchwork plains of Castilla-La Mancha, in central Spain, were once known for their windmills.

But now it is wind turbines, their modern-day equivalent, which are much more visible on the region’s skyline.

The 28 vast turbines of the Sierra del Romeral windfarm, perched on hills not far from the historic city of Toledo, look out over this landscape.

Operated by Spanish firm Iberdrola, they are part of a trend that has accelerated Spain’s renewable energy output over the past half-decade, making the country a major presence in the industry.

Spain’s total wind generation capacity, its prime renewable source in recent years, has doubled since 2008. Solar energy capacity, meanwhile, has increased by a factor of eight over the same period.

This makes Spain the EU member state with the second-largest renewable energy infrastructure, after Sweden in first place.

Earlier this year, Spain's Socialist Workers' Party prime minister, Pedro Sánchez, described his country as "a driving force of the energy transition on a global scale".

The boom began soon after the arrival of a new government under Mr Sánchez in 2018, with the removal of regulatory obstacles, and the introduction of subsidies for renewable installation. The pandemic further accelerated the trend on a domestic level.

"The impact of Covid was very positive for our sector," says José Donoso, chief executive of UNEF, the Spanish Photovoltaic Association, which represents the solar panel sector. "People saved money, took time to think about what to do with it, and many of them decided that it was better invested on their roof than in their bank."

Meanwhile, the government introduced ambitious new targets, including covering 81% of Spain’s electricity needs with renewables by 2030.

However, behind this success story, there are concerns within the electricity industry caused by an imbalance between supply and demand with, at times, a surplus of electricity.

Even though the Spanish economy has bounced back strongly from the trauma of the Covid pandemic, and is growing faster than all of the bloc’s other big economies, electricity consumption has been dropping in recent years.

Last year, demand for electricity was even below that seen in the pandemic year 2020, and the lowest since 2003.

"What we saw until 2005 was that when GDP increased, demand for electricity increased more than GDP," says Miguel de la Torre Rodríguez, head of system development at Red Eléctrica (REE), the company that operates Spain's national grid.

More recently, he says, "we've seen that demand has increased less than GDP. What we're seeing is a decoupling of energy intensity from the economy".

There are several reasons for the recent drop in demand. They include the energy crisis triggered by Russia's invasion of Ukraine in 2022, which caused businesses and homes across Europe to cut back on usage.

Also, energy efficiency has improved and become more commonplace.

The increased usage of renewable energy has also contributed to the reduction in demand for electricity from the national grid.

Mr Rodríguez says that during daylight hours, when solar energy output is particularly strong, the supply-demand balance can be pushed out of kilter, having an impact on prices.

"Since the power system always has to have an equilibrium – demand has to equal generation – that has meant there has been excess generation during those hours," he says.

"That has driven prices down, especially during certain hours, when the prices have been zero or even negative."

While such low prices are welcome for consumers, they are potentially a problem when it comes to attracting investment to the industry.

"This can make it more difficult for investors to increase their investment in new electricity based on renewable energies," says Sara Pizzinato, a renewable energy expert at Greenpeace Spain.

"That can be a bottleneck for the energy transition."

Concerns about Spain having an excess of electricity have led to discussion of the need to accelerate the "electrification" of the economy, which involves moving it away from fossil fuels. The Sánchez government has set a target of making 34% of the economy reliant on electricity by 2030.

"This process is going slowly, and we need to accelerate it," says UNEF’s José Donoso.

"Electricity is the cheapest and most competitive way to produce clean energy.

"We need facilities that use electricity in place of fossil fuels."

Shifting to a total reliance on electricity is seen as unrealistic, as some important sectors like chemicals and metals will find the transition difficult.

However, Mr Donoso and others see plenty of scope for swifter electrification. For example, Spain is trailing many of its European neighbours when it comes to the installation of heat pumps in homes, and the use of electric cars, which only make up around 6% of vehicles on the road.

Ms Pizzinato agrees that electrification is crucial, but says there are other ways of tackling the supply-demand quandary, including phasing out the use of nuclear plants more quickly, and increasing energy storage capability.

She says: "We need to engage more people and more industries in demand-side management, to make sure the flexibility needed in the system is out there to make generation and demand match better during the day and during the night."

Archived link

- Inflation is rising in Russia. At the same time, banks are increasingly denying citizens’ loan applications. As a result, Russians are turning more and more to payday lenders to buy basic necessities like food and clothing — and this doesn’t bode well for the country’s economy. - Payday loans in Russia are capped at one million rubles (about $11,250) and generally have a repayment period of between one week and 60 days. Interest rates for these loans are high, averaging at about 0.5–0.8 percent per day, or up to 292 percent per year. - Currently, the average monthly income of Russians applying for payday loans is 50,000 rubles, or about $562, while the average size of these loans is 9,990 rubles ($112). Economists say that Russians are aggressively taking out loans and payday loans, despite the fact that interest rates are rising faster than incomes. - More than 12,000 people initiated a simplified, 'out-of-court' bankruptcy process process in the first quarter of 2024 — more than five times the number of people who did so in the same period the previous year. The number of judicial bankruptcies rose by 18.2 percent to 89,800 over the same period.--

Journalists from the independent Russian outlet Holod spoke to two economists and a lawyer about how Russia’s payday loan services work and what their rise could bring in the future. Meduza shares an English-language summary of their reporting.

In 2023, Russians took out a record-breaking one trillion rubles (approximately $11.2 billion) in payday loans — 30% more than in 2022. Some experts predict that this figure could increase again by as much as 25 percent in 2024. By the end of 2023, the number of Russians using “microfinance organizations” (MFOs) had reached 19.9 million, which is 2.7 million more than in the previous year. And as of the end of the first quarter of 2024, about 32 percent of these loans were overdue.

Payday loans in Russia are capped at one million rubles (about $11,250) and generally have a repayment period of between one week and 60 days. Interest rates for these loans are high, averaging at about 0.5–0.8 percent per day, or up to 292 percent per year. They can be secured easily and quickly both online and offline, with applications often processed in less than an hour and money often disbursed on the same day. Traditional bank loans, in contrast, can take several days to process, and the refusal rate from Russian banks reached 80 percent in October of last year.

Currently, the average monthly income of Russians applying for payday loans is 50,000 rubles, or about $562, while the average size of these loans is 9,990 rubles ($112). In general, Russians turn to payday loans to purchase food and clothing as well as to pay off older loans, economist Nikolai Kulbak told Holod. Most people who use payday loans in Russia use them more than once: in 2023, about 83.4 percent of payday loan recipients were repeat customers.

A house of cards

According to economist Yevgeny Nadorshin, the current rate of growth of the payday lending industry in Russia is a bad sign for the health of the Russian economy. He told Holod:

Russians are aggressively taking out loans and payday loans, despite the fact that interest rates are rising faster than incomes. The country’s economy is currently growing not from import substitution or investments but due to a rise in consumer demand that’s being fueled by loans. This kind of economic growth can’t be sustained for long. Its slowdown or even decline are the most likely scenarios for the future.

According to Nadorshin, MFOs currently have a greater impact on the market than banks do. “This is due to the tightening of credit policies and the increase of the key interest rate, which affects the interest rate at which banks lend money,” he explained. “As a result, MFOs have seen an additional influx of clients, which has enabled them to set a new record in loan volumes. According to data from the Central Bank, some of the people who took out payday loans in the first quarter of 2024 had previously obtained bank loans.”

Kulbak told Holod he also expects to see a continued rise in the number of payday loans being issued in Russia. “Banks used to give loans even to clients who were already devoting most of their income to paying off existing loans; now they’re increasingly refusing people,” he said, adding that he expects the trend to persist for the next six months since inflation does not seem to be slowing down. “The fewer loans banks approve, the more people turn to MFOs. Ultimately, this leads to an increase in bankruptcies,” said the economist.

A vicious cycle

MFOs in Russia often bundle their loans with other services, from text message notifications to life insurance and legal consultations. The cost of these services can be as high as the loan amount itself and also incurs interest.

Defaulting on payments of these fees can lead to penalties, legal proceedings, and damage to one’s credit history. “If you stop making payments, interest and penalties will start accruing in addition to the principal debt,” lawyer Filipp Pokrovsky told Holod. “According to [Russian] law, the sum of fines and interest on contracts lasting less than one year cannot exceed 130 percent of the principal debt, meaning that for a loan of 10,000 rubles, MFOs can demand repayment of up to 23,000 rubles.”

One of the main risks that MFO clients face is the accumulation of multiple loans. “When a person starts extending their debts, it can turn into a vicious cycle: they’re compelled to take out additional payday loans to settle previous ones,” Pokrovsky explained.

In addition to the traditional personal bankruptcy process, Russian law allows certain categories of the population, such as pensioners, to go through a simplified, out-of-court bankruptcy process. More than 12,000 people initiated this process in the first quarter of 2024 — more than five times the number of people who did so in the same period the previous year. The number of judicial bankruptcies rose by 18.2 percent to 89,800 over the same period.

Since Russia first gave individuals the right to file for bankruptcy in 2015, over a million Russians have declared themselves insolvent.

Archived link

- Inflation is rising in Russia. At the same time, banks are increasingly denying citizens’ loan applications. As a result, Russians are turning more and more to payday lenders to buy basic necessities like food and clothing — and this doesn’t bode well for the country’s economy. - Payday loans in Russia are capped at one million rubles (about $11,250) and generally have a repayment period of between one week and 60 days. Interest rates for these loans are high, averaging at about 0.5–0.8 percent per day, or up to 292 percent per year. - Currently, the average monthly income of Russians applying for payday loans is 50,000 rubles, or about $562, while the average size of these loans is 9,990 rubles ($112). Economists say that Russians are aggressively taking out loans and payday loans, despite the fact that interest rates are rising faster than incomes. - More than 12,000 people initiated a simplified, 'out-of-court' bankruptcy process process in the first quarter of 2024 — more than five times the number of people who did so in the same period the previous year. The number of judicial bankruptcies rose by 18.2 percent to 89,800 over the same period.--

Journalists from the independent Russian outlet Holod spoke to two economists and a lawyer about how Russia’s payday loan services work and what their rise could bring in the future. Meduza shares an English-language summary of their reporting.

In 2023, Russians took out a record-breaking one trillion rubles (approximately $11.2 billion) in payday loans — 30% more than in 2022. Some experts predict that this figure could increase again by as much as 25 percent in 2024. By the end of 2023, the number of Russians using “microfinance organizations” (MFOs) had reached 19.9 million, which is 2.7 million more than in the previous year. And as of the end of the first quarter of 2024, about 32 percent of these loans were overdue.

Payday loans in Russia are capped at one million rubles (about $11,250) and generally have a repayment period of between one week and 60 days. Interest rates for these loans are high, averaging at about 0.5–0.8 percent per day, or up to 292 percent per year. They can be secured easily and quickly both online and offline, with applications often processed in less than an hour and money often disbursed on the same day. Traditional bank loans, in contrast, can take several days to process, and the refusal rate from Russian banks reached 80 percent in October of last year.

Currently, the average monthly income of Russians applying for payday loans is 50,000 rubles, or about $562, while the average size of these loans is 9,990 rubles ($112). In general, Russians turn to payday loans to purchase food and clothing as well as to pay off older loans, economist Nikolai Kulbak told Holod. Most people who use payday loans in Russia use them more than once: in 2023, about 83.4 percent of payday loan recipients were repeat customers.

A house of cards

According to economist Yevgeny Nadorshin, the current rate of growth of the payday lending industry in Russia is a bad sign for the health of the Russian economy. He told Holod:

Russians are aggressively taking out loans and payday loans, despite the fact that interest rates are rising faster than incomes. The country’s economy is currently growing not from import substitution or investments but due to a rise in consumer demand that’s being fueled by loans. This kind of economic growth can’t be sustained for long. Its slowdown or even decline are the most likely scenarios for the future.

According to Nadorshin, MFOs currently have a greater impact on the market than banks do. “This is due to the tightening of credit policies and the increase of the key interest rate, which affects the interest rate at which banks lend money,” he explained. “As a result, MFOs have seen an additional influx of clients, which has enabled them to set a new record in loan volumes. According to data from the Central Bank, some of the people who took out payday loans in the first quarter of 2024 had previously obtained bank loans.”

Kulbak told Holod he also expects to see a continued rise in the number of payday loans being issued in Russia. “Banks used to give loans even to clients who were already devoting most of their income to paying off existing loans; now they’re increasingly refusing people,” he said, adding that he expects the trend to persist for the next six months since inflation does not seem to be slowing down. “The fewer loans banks approve, the more people turn to MFOs. Ultimately, this leads to an increase in bankruptcies,” said the economist.

A vicious cycle

MFOs in Russia often bundle their loans with other services, from text message notifications to life insurance and legal consultations. The cost of these services can be as high as the loan amount itself and also incurs interest.

Defaulting on payments of these fees can lead to penalties, legal proceedings, and damage to one’s credit history. “If you stop making payments, interest and penalties will start accruing in addition to the principal debt,” lawyer Filipp Pokrovsky told Holod. “According to [Russian] law, the sum of fines and interest on contracts lasting less than one year cannot exceed 130 percent of the principal debt, meaning that for a loan of 10,000 rubles, MFOs can demand repayment of up to 23,000 rubles.”

One of the main risks that MFO clients face is the accumulation of multiple loans. “When a person starts extending their debts, it can turn into a vicious cycle: they’re compelled to take out additional payday loans to settle previous ones,” Pokrovsky explained.

In addition to the traditional personal bankruptcy process, Russian law allows certain categories of the population, such as pensioners, to go through a simplified, out-of-court bankruptcy process. More than 12,000 people initiated this process in the first quarter of 2024 — more than five times the number of people who did so in the same period the previous year. The number of judicial bankruptcies rose by 18.2 percent to 89,800 over the same period.

Since Russia first gave individuals the right to file for bankruptcy in 2015, over a million Russians have declared themselves insolvent.

Archived link

- Inflation is rising in Russia. At the same time, banks are increasingly denying citizens’ loan applications. As a result, Russians are turning more and more to payday lenders to buy basic necessities like food and clothing — and this doesn’t bode well for the country’s economy. - Payday loans in Russia are capped at one million rubles (about $11,250) and generally have a repayment period of between one week and 60 days. Interest rates for these loans are high, averaging at about 0.5–0.8 percent per day, or up to 292 percent per year. - Currently, the average monthly income of Russians applying for payday loans is 50,000 rubles, or about $562, while the average size of these loans is 9,990 rubles ($112). Economists say that Russians are aggressively taking out loans and payday loans, despite the fact that interest rates are rising faster than incomes. - More than 12,000 people initiated a simplified, 'out-of-court' bankruptcy process process in the first quarter of 2024 — more than five times the number of people who did so in the same period the previous year. The number of judicial bankruptcies rose by 18.2 percent to 89,800 over the same period.--

Journalists from the independent Russian outlet Holod spoke to two economists and a lawyer about how Russia’s payday loan services work and what their rise could bring in the future. Meduza shares an English-language summary of their reporting.

In 2023, Russians took out a record-breaking one trillion rubles (approximately $11.2 billion) in payday loans — 30% more than in 2022. Some experts predict that this figure could increase again by as much as 25 percent in 2024. By the end of 2023, the number of Russians using “microfinance organizations” (MFOs) had reached 19.9 million, which is 2.7 million more than in the previous year. And as of the end of the first quarter of 2024, about 32 percent of these loans were overdue.

Payday loans in Russia are capped at one million rubles (about $11,250) and generally have a repayment period of between one week and 60 days. Interest rates for these loans are high, averaging at about 0.5–0.8 percent per day, or up to 292 percent per year. They can be secured easily and quickly both online and offline, with applications often processed in less than an hour and money often disbursed on the same day. Traditional bank loans, in contrast, can take several days to process, and the refusal rate from Russian banks reached 80 percent in October of last year.

Currently, the average monthly income of Russians applying for payday loans is 50,000 rubles, or about $562, while the average size of these loans is 9,990 rubles ($112). In general, Russians turn to payday loans to purchase food and clothing as well as to pay off older loans, economist Nikolai Kulbak told Holod. Most people who use payday loans in Russia use them more than once: in 2023, about 83.4 percent of payday loan recipients were repeat customers.

A house of cards

According to economist Yevgeny Nadorshin, the current rate of growth of the payday lending industry in Russia is a bad sign for the health of the Russian economy. He told Holod:

Russians are aggressively taking out loans and payday loans, despite the fact that interest rates are rising faster than incomes. The country’s economy is currently growing not from import substitution or investments but due to a rise in consumer demand that’s being fueled by loans. This kind of economic growth can’t be sustained for long. Its slowdown or even decline are the most likely scenarios for the future.

According to Nadorshin, MFOs currently have a greater impact on the market than banks do. “This is due to the tightening of credit policies and the increase of the key interest rate, which affects the interest rate at which banks lend money,” he explained. “As a result, MFOs have seen an additional influx of clients, which has enabled them to set a new record in loan volumes. According to data from the Central Bank, some of the people who took out payday loans in the first quarter of 2024 had previously obtained bank loans.”

Kulbak told Holod he also expects to see a continued rise in the number of payday loans being issued in Russia. “Banks used to give loans even to clients who were already devoting most of their income to paying off existing loans; now they’re increasingly refusing people,” he said, adding that he expects the trend to persist for the next six months since inflation does not seem to be slowing down. “The fewer loans banks approve, the more people turn to MFOs. Ultimately, this leads to an increase in bankruptcies,” said the economist.

A vicious cycle

MFOs in Russia often bundle their loans with other services, from text message notifications to life insurance and legal consultations. The cost of these services can be as high as the loan amount itself and also incurs interest.

Defaulting on payments of these fees can lead to penalties, legal proceedings, and damage to one’s credit history. “If you stop making payments, interest and penalties will start accruing in addition to the principal debt,” lawyer Filipp Pokrovsky told Holod. “According to [Russian] law, the sum of fines and interest on contracts lasting less than one year cannot exceed 130 percent of the principal debt, meaning that for a loan of 10,000 rubles, MFOs can demand repayment of up to 23,000 rubles.”

One of the main risks that MFO clients face is the accumulation of multiple loans. “When a person starts extending their debts, it can turn into a vicious cycle: they’re compelled to take out additional payday loans to settle previous ones,” Pokrovsky explained.

In addition to the traditional personal bankruptcy process, Russian law allows certain categories of the population, such as pensioners, to go through a simplified, out-of-court bankruptcy process. More than 12,000 people initiated this process in the first quarter of 2024 — more than five times the number of people who did so in the same period the previous year. The number of judicial bankruptcies rose by 18.2 percent to 89,800 over the same period.

Since Russia first gave individuals the right to file for bankruptcy in 2015, over a million Russians have declared themselves insolvent.

Archived link

- Inflation is rising in Russia. At the same time, banks are increasingly denying citizens’ loan applications. As a result, Russians are turning more and more to payday lenders to buy basic necessities like food and clothing — and this doesn’t bode well for the country’s economy. - Payday loans in Russia are capped at one million rubles (about $11,250) and generally have a repayment period of between one week and 60 days. Interest rates for these loans are high, averaging at about 0.5–0.8 percent per day, or up to 292 percent per year. - Currently, the average monthly income of Russians applying for payday loans is 50,000 rubles, or about $562, while the average size of these loans is 9,990 rubles ($112). Economists say that Russians are aggressively taking out loans and payday loans, despite the fact that interest rates are rising faster than incomes. - More than 12,000 people initiated a simplified, 'out-of-court' bankruptcy process process in the first quarter of 2024 — more than five times the number of people who did so in the same period the previous year. The number of judicial bankruptcies rose by 18.2 percent to 89,800 over the same period.--

Journalists from the independent Russian outlet Holod spoke to two economists and a lawyer about how Russia’s payday loan services work and what their rise could bring in the future. Meduza shares an English-language summary of their reporting.

In 2023, Russians took out a record-breaking one trillion rubles (approximately $11.2 billion) in payday loans — 30% more than in 2022. Some experts predict that this figure could increase again by as much as 25 percent in 2024. By the end of 2023, the number of Russians using “microfinance organizations” (MFOs) had reached 19.9 million, which is 2.7 million more than in the previous year. And as of the end of the first quarter of 2024, about 32 percent of these loans were overdue.

Payday loans in Russia are capped at one million rubles (about $11,250) and generally have a repayment period of between one week and 60 days. Interest rates for these loans are high, averaging at about 0.5–0.8 percent per day, or up to 292 percent per year. They can be secured easily and quickly both online and offline, with applications often processed in less than an hour and money often disbursed on the same day. Traditional bank loans, in contrast, can take several days to process, and the refusal rate from Russian banks reached 80 percent in October of last year.

Currently, the average monthly income of Russians applying for payday loans is 50,000 rubles, or about $562, while the average size of these loans is 9,990 rubles ($112). In general, Russians turn to payday loans to purchase food and clothing as well as to pay off older loans, economist Nikolai Kulbak told Holod. Most people who use payday loans in Russia use them more than once: in 2023, about 83.4 percent of payday loan recipients were repeat customers.

A house of cards

According to economist Yevgeny Nadorshin, the current rate of growth of the payday lending industry in Russia is a bad sign for the health of the Russian economy. He told Holod:

Russians are aggressively taking out loans and payday loans, despite the fact that interest rates are rising faster than incomes. The country’s economy is currently growing not from import substitution or investments but due to a rise in consumer demand that’s being fueled by loans. This kind of economic growth can’t be sustained for long. Its slowdown or even decline are the most likely scenarios for the future.

According to Nadorshin, MFOs currently have a greater impact on the market than banks do. “This is due to the tightening of credit policies and the increase of the key interest rate, which affects the interest rate at which banks lend money,” he explained. “As a result, MFOs have seen an additional influx of clients, which has enabled them to set a new record in loan volumes. According to data from the Central Bank, some of the people who took out payday loans in the first quarter of 2024 had previously obtained bank loans.”

Kulbak told Holod he also expects to see a continued rise in the number of payday loans being issued in Russia. “Banks used to give loans even to clients who were already devoting most of their income to paying off existing loans; now they’re increasingly refusing people,” he said, adding that he expects the trend to persist for the next six months since inflation does not seem to be slowing down. “The fewer loans banks approve, the more people turn to MFOs. Ultimately, this leads to an increase in bankruptcies,” said the economist.

A vicious cycle

MFOs in Russia often bundle their loans with other services, from text message notifications to life insurance and legal consultations. The cost of these services can be as high as the loan amount itself and also incurs interest.

Defaulting on payments of these fees can lead to penalties, legal proceedings, and damage to one’s credit history. “If you stop making payments, interest and penalties will start accruing in addition to the principal debt,” lawyer Filipp Pokrovsky told Holod. “According to [Russian] law, the sum of fines and interest on contracts lasting less than one year cannot exceed 130 percent of the principal debt, meaning that for a loan of 10,000 rubles, MFOs can demand repayment of up to 23,000 rubles.”

One of the main risks that MFO clients face is the accumulation of multiple loans. “When a person starts extending their debts, it can turn into a vicious cycle: they’re compelled to take out additional payday loans to settle previous ones,” Pokrovsky explained.

In addition to the traditional personal bankruptcy process, Russian law allows certain categories of the population, such as pensioners, to go through a simplified, out-of-court bankruptcy process. More than 12,000 people initiated this process in the first quarter of 2024 — more than five times the number of people who did so in the same period the previous year. The number of judicial bankruptcies rose by 18.2 percent to 89,800 over the same period.

Since Russia first gave individuals the right to file for bankruptcy in 2015, over a million Russians have declared themselves insolvent.

Here's Mr. Stoltenberg's statement in a video (1 min)

The head of Nato has told the BBC that China should face consequences for supporting Russia's war in Ukraine, if it does not change its ways.

Jens Stoltenberg said Beijing was "trying to get it both ways" by supporting Russia's war effort, while also trying to maintain relationships with European allies.

"This cannot work in the long run," Mr Stoltenberg told BBC News during a visit to Washington.

In the wide ranging interview, Mr Stoltenberg also addressed nuclear weapons and defence spending.

His comments come as Russia shows no sign of easing its war against Ukraine.

A peace summit held in Switzerland at the weekend saw dozens of nations commit to supporting Kyiv, but Russia called it a waste of time and said it would only agree to peace talks if Ukraine essentially surrendered.

When pressed on what Nato members might do about China's support of Russia, Mr Stoltenberg said there was an "ongoing conversation" about possible sanctions.

He said China was "sharing a lot of technologies, [like] micro-electronics, which are key for Russia to build missiles, weapons they use against Ukraine".

He added that "at some stage, we should consider some kind of economic cost if China doesn't change their behaviour".

Beijing is already under some sanctions for its support of Russia - last month, the US announced restrictions that would target about 20 firms based in China and Hong Kong.

China has defended its business with Moscow, saying it is not selling lethal arms and "prudently handles the export of dual-use items in accordance with laws and regulations".

Mr Stoltenberg's visit to Washington came as the Kremlin confirmed that Vladimir Putin will travel to North Korea on Tuesday.

It follows his visit to China last month.

Russia has become increasingly isolated on the world stage since it launched its full-scale war with Ukraine in 2022. Mr Putin has repeatedly said that the West's balance of power is shifting, and he has worked to strengthen ties with like-minded leaders.

"Russia right now is aligning more and more with authoritarian leaders," Mr Stoltenberg told the BBC, listing Iran, Beijing and North Korea.

He said that the North has sent artillery shells to Russia, and in return Russia had given advanced technology for North Korea's missile and nuclear programmes.

"So North Korea is helping Russia to conduct a war of aggression against Ukraine."

Speaking ahead of a meeting with US President Joe Biden, the Nato chief also announced that more than 20 nations are expected to meet a defence spending target of 2% this year - more than any other year since it was pledged in 2014.

"This is good for Europe and good for America, especially since much of this extra money is spent here in the United States," he said.

Mr Stoltenberg also addressed comments that he made to the Telegraph on Sunday which indicated that Nato may be considering increasing the number of deployable warheads as a deterrent against growing threats from Russia and China.

The comments were criticised as "nothing but another escalation of tension" by Kremlin spokesman Dmitry Peskov.

But Mr Stoltenberg said they were a "general message" that Nato is a nuclear alliance, and that any attack on a Nato member will "trigger a response from the whole alliance".

"The purpose of Nato is not to fight the war, the purpose of that is to prevent the war," he said.

Here's Mr. Stoltenberg's statement in a video (1 min)

The head of Nato has told the BBC that China should face consequences for supporting Russia's war in Ukraine, if it does not change its ways.

Jens Stoltenberg said Beijing was "trying to get it both ways" by supporting Russia's war effort, while also trying to maintain relationships with European allies.

"This cannot work in the long run," Mr Stoltenberg told BBC News during a visit to Washington.

In the wide ranging interview, Mr Stoltenberg also addressed nuclear weapons and defence spending.

His comments come as Russia shows no sign of easing its war against Ukraine.

A peace summit held in Switzerland at the weekend saw dozens of nations commit to supporting Kyiv, but Russia called it a waste of time and said it would only agree to peace talks if Ukraine essentially surrendered.

When pressed on what Nato members might do about China's support of Russia, Mr Stoltenberg said there was an "ongoing conversation" about possible sanctions.

He said China was "sharing a lot of technologies, [like] micro-electronics, which are key for Russia to build missiles, weapons they use against Ukraine".

He added that "at some stage, we should consider some kind of economic cost if China doesn't change their behaviour".

Beijing is already under some sanctions for its support of Russia - last month, the US announced restrictions that would target about 20 firms based in China and Hong Kong.

China has defended its business with Moscow, saying it is not selling lethal arms and "prudently handles the export of dual-use items in accordance with laws and regulations".

Mr Stoltenberg's visit to Washington came as the Kremlin confirmed that Vladimir Putin will travel to North Korea on Tuesday.

It follows his visit to China last month.

Russia has become increasingly isolated on the world stage since it launched its full-scale war with Ukraine in 2022. Mr Putin has repeatedly said that the West's balance of power is shifting, and he has worked to strengthen ties with like-minded leaders.

"Russia right now is aligning more and more with authoritarian leaders," Mr Stoltenberg told the BBC, listing Iran, Beijing and North Korea.

He said that the North has sent artillery shells to Russia, and in return Russia had given advanced technology for North Korea's missile and nuclear programmes.

"So North Korea is helping Russia to conduct a war of aggression against Ukraine."

Speaking ahead of a meeting with US President Joe Biden, the Nato chief also announced that more than 20 nations are expected to meet a defence spending target of 2% this year - more than any other year since it was pledged in 2014.

"This is good for Europe and good for America, especially since much of this extra money is spent here in the United States," he said.

Mr Stoltenberg also addressed comments that he made to the Telegraph on Sunday which indicated that Nato may be considering increasing the number of deployable warheads as a deterrent against growing threats from Russia and China.

The comments were criticised as "nothing but another escalation of tension" by Kremlin spokesman Dmitry Peskov.

But Mr Stoltenberg said they were a "general message" that Nato is a nuclear alliance, and that any attack on a Nato member will "trigger a response from the whole alliance".

"The purpose of Nato is not to fight the war, the purpose of that is to prevent the war," he said.

Here's Mr. Stoltenberg's statement in a video (1 min)

The head of Nato has told the BBC that China should face consequences for supporting Russia's war in Ukraine, if it does not change its ways.

Jens Stoltenberg said Beijing was "trying to get it both ways" by supporting Russia's war effort, while also trying to maintain relationships with European allies.

"This cannot work in the long run," Mr Stoltenberg told BBC News during a visit to Washington.

In the wide ranging interview, Mr Stoltenberg also addressed nuclear weapons and defence spending.

His comments come as Russia shows no sign of easing its war against Ukraine.

A peace summit held in Switzerland at the weekend saw dozens of nations commit to supporting Kyiv, but Russia called it a waste of time and said it would only agree to peace talks if Ukraine essentially surrendered.

When pressed on what Nato members might do about China's support of Russia, Mr Stoltenberg said there was an "ongoing conversation" about possible sanctions.

He said China was "sharing a lot of technologies, [like] micro-electronics, which are key for Russia to build missiles, weapons they use against Ukraine".

He added that "at some stage, we should consider some kind of economic cost if China doesn't change their behaviour".

Beijing is already under some sanctions for its support of Russia - last month, the US announced restrictions that would target about 20 firms based in China and Hong Kong.

China has defended its business with Moscow, saying it is not selling lethal arms and "prudently handles the export of dual-use items in accordance with laws and regulations".

Mr Stoltenberg's visit to Washington came as the Kremlin confirmed that Vladimir Putin will travel to North Korea on Tuesday.

It follows his visit to China last month.

Russia has become increasingly isolated on the world stage since it launched its full-scale war with Ukraine in 2022. Mr Putin has repeatedly said that the West's balance of power is shifting, and he has worked to strengthen ties with like-minded leaders.

"Russia right now is aligning more and more with authoritarian leaders," Mr Stoltenberg told the BBC, listing Iran, Beijing and North Korea.

He said that the North has sent artillery shells to Russia, and in return Russia had given advanced technology for North Korea's missile and nuclear programmes.

"So North Korea is helping Russia to conduct a war of aggression against Ukraine."

Speaking ahead of a meeting with US President Joe Biden, the Nato chief also announced that more than 20 nations are expected to meet a defence spending target of 2% this year - more than any other year since it was pledged in 2014.

"This is good for Europe and good for America, especially since much of this extra money is spent here in the United States," he said.

Mr Stoltenberg also addressed comments that he made to the Telegraph on Sunday which indicated that Nato may be considering increasing the number of deployable warheads as a deterrent against growing threats from Russia and China.

The comments were criticised as "nothing but another escalation of tension" by Kremlin spokesman Dmitry Peskov.

But Mr Stoltenberg said they were a "general message" that Nato is a nuclear alliance, and that any attack on a Nato member will "trigger a response from the whole alliance".

"The purpose of Nato is not to fight the war, the purpose of that is to prevent the war," he said.

Here's Mr. Stoltenberg's statement in a video (1 min)

The head of Nato has told the BBC that China should face consequences for supporting Russia's war in Ukraine, if it does not change its ways.

Jens Stoltenberg said Beijing was "trying to get it both ways" by supporting Russia's war effort, while also trying to maintain relationships with European allies.

"This cannot work in the long run," Mr Stoltenberg told BBC News during a visit to Washington.

In the wide ranging interview, Mr Stoltenberg also addressed nuclear weapons and defence spending.

His comments come as Russia shows no sign of easing its war against Ukraine.

A peace summit held in Switzerland at the weekend saw dozens of nations commit to supporting Kyiv, but Russia called it a waste of time and said it would only agree to peace talks if Ukraine essentially surrendered.

When pressed on what Nato members might do about China's support of Russia, Mr Stoltenberg said there was an "ongoing conversation" about possible sanctions.

He said China was "sharing a lot of technologies, [like] micro-electronics, which are key for Russia to build missiles, weapons they use against Ukraine".

He added that "at some stage, we should consider some kind of economic cost if China doesn't change their behaviour".

Beijing is already under some sanctions for its support of Russia - last month, the US announced restrictions that would target about 20 firms based in China and Hong Kong.

China has defended its business with Moscow, saying it is not selling lethal arms and "prudently handles the export of dual-use items in accordance with laws and regulations".

Mr Stoltenberg's visit to Washington came as the Kremlin confirmed that Vladimir Putin will travel to North Korea on Tuesday.

It follows his visit to China last month.

Russia has become increasingly isolated on the world stage since it launched its full-scale war with Ukraine in 2022. Mr Putin has repeatedly said that the West's balance of power is shifting, and he has worked to strengthen ties with like-minded leaders.

"Russia right now is aligning more and more with authoritarian leaders," Mr Stoltenberg told the BBC, listing Iran, Beijing and North Korea.

He said that the North has sent artillery shells to Russia, and in return Russia had given advanced technology for North Korea's missile and nuclear programmes.

"So North Korea is helping Russia to conduct a war of aggression against Ukraine."

Speaking ahead of a meeting with US President Joe Biden, the Nato chief also announced that more than 20 nations are expected to meet a defence spending target of 2% this year - more than any other year since it was pledged in 2014.

"This is good for Europe and good for America, especially since much of this extra money is spent here in the United States," he said.

Mr Stoltenberg also addressed comments that he made to the Telegraph on Sunday which indicated that Nato may be considering increasing the number of deployable warheads as a deterrent against growing threats from Russia and China.

The comments were criticised as "nothing but another escalation of tension" by Kremlin spokesman Dmitry Peskov.

But Mr Stoltenberg said they were a "general message" that Nato is a nuclear alliance, and that any attack on a Nato member will "trigger a response from the whole alliance".

"The purpose of Nato is not to fight the war, the purpose of that is to prevent the war," he said.

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Since the full-scale invasion of Ukraine more than two years ago, thousands of Ukrainian infants have been forcibly taken to Russia to give them up for forced adoption. Behind this horrifying human trafficking operation stands the Kremlin, specifically Putin ally Maria Lvova-Belova.

Abducted Ukrainian children's documents are changed to Russian ones, they are adopted while having living relatives in Ukraine, and international organizations are prevented from helping these children return home.

One example was reported by the British BBC. Sergei Mironov, the 70-year-old leader of a Russian political party, and his wife, Inna Varlamova, deported an orphanage in the Kherson region in the fall of 2022 and forcibly adopted a 10 month old girl.. The child, originally named Margarita, was one of 48 who went missing from Kherson Regional Children's Home when Russian forces took control of the city.

Now, Russia is set to 'legislate' its crime against humanity. Anna Kuznetsova, Deputy Chair of the Russian State Duma, said that Russia has prepared 64 proposals and recommendations "aimed to expanding messures to support social services and the resocialization of children [and] protect minors from crimes by foreign states [and] the regime in Kyiv". In other words: Russia officially denies the legal guardians of forcibly deported and adopted Ukrainian children and attempts to prevent the opportunity to repatriate these children.

Here is a video (2 min) of Ms. Kuznetsova's announcment in the Duma, Russia's parliament.