In a major infrastructure move, Russia has approved the construction of its first high-speed passenger railway between Moscow and St. Petersburg. The project, announced during the St. Petersburg International Economic Forum, will be funded with billions of dollars from the state budget.

The 679 km railway, set to cost over 2.3 trillion roubles ($25.97 billion), aims to reduce travel time between the two cities from 4-5 hours to just 2-2.5 hours. Russian-made trains traveling at 360 km/h will operate on this route.

The project will be developed by VSM Two Capitals, a Russian company, using both state and private funds. The government plans to allocate at least 300 billion roubles in loans from the National Welfare Fund at 1% interest in 2025 and provide about 328 billion roubles in subsidies between 2024 and 2038.

Former Transport Minister Vitaly Savelyev highlighted that the National Welfare Fund will contribute over 580 billion roubles, with additional funding from Russian state-owned banks VTB, Sberbank, and Gazprombank. Sberbank's head, German Gref, confirmed the bank's participation in financing the project.

This initiative comes as Russia considers raising taxes on companies and the wealthy to increase next year's budget revenues by an additional $30 billion, potentially boosting spending on infrastructure and its military efforts in Ukraine.