Russia’s military expenditures are projected to exceed initial budget plans by $28 billion this year, prompting significant fiscal adjustments. The country’s budget deficit has reached unprecedented levels, leading the Ministry of Finance to request a freeze on spending across various sectors.
Finance Minister Anton Siluanov addressed the government in February, urging a halt to planned expenditures in multiple areas due to escalating military costs. Despite a record defense budget allocation, these funds have proven insufficient.
This year, the Russian government has earmarked 16.84 trillion rubles, approximately $238 billion, for military and security purposes, accounting for nearly 40% of the total state budget. However, even this substantial amount falls short of meeting the demands.
The budget deficit has surged dramatically, with projections indicating a shortfall of 3.8 trillion rubles by the end of 2026. In the first four months of this year alone, the deficit has already reached 5.9 trillion rubles, equivalent to 2.5% of GDP.
This represents the largest deficit since the onset of the full-scale invasion of Ukraine. In February, the Ministry of Finance estimated an additional shortfall of 2 trillion rubles due to military expenditures, which could escalate to 4 trillion rubles under a negative scenario, potentially persisting at that level through 2027-2028.
In a letter to the Cabinet, Siluanov requested a freeze on expenditures amounting to 2.9 trillion rubles for the current year. By 2028, the ministry anticipates this figure could rise to 7.1 trillion rubles.
Earlier in January, the ministry had separately urged government agencies to reduce non-essential spending by 10% to mitigate the growing deficit, while defense and social expenditures remained untouched.
Economist Sofia Donets commented on the economic landscape, stating, “The economy is not in the best shape, but it is stable. However, the budget remains a central topic in the media, in statements from the central bank, and in behind-the-scenes discussions.” She noted that citizens are scrutinizing the budget to gauge potential impacts on tariffs and future tax increases.
Former Central Bank employee Aleksandra Prokopenko remarked that Siluanov’s letter clearly indicates the Kremlin’s priorities. “The Ministry of Finance requires funds for the war, so regardless of the circumstances, cuts will not affect defense and security expenditures, but rather procurement, corporate subsidies, and funding for state institutions,” she stated.
Russia's military spending is set to exceed budget forecasts by $28 billion this year, leading to a record budget deficit. The Finance Ministry has requested a freeze on non-military expenditures as the country grapples with escalating costs related to its military operations.