Russia plans to keep military spending at a historically high level in 2025, with a very small decline in 2026-2027. This indicates that the Russians do not intend to end the war in the near future, reports Komersant ukrainskyi
reports citing Bloomberg.
According to a draft three-year budget seen by Bloomberg, the Russian government plans to increase defence spending to 13.2 trillion rubles ($142 billion) in 2025, up from 10.4 trillion rubles projected for this year. In 2025, defence spending will thus account for 6.2% of gross domestic product (GDP). In 2026, spending is expected to fall to 5.6% of GDP, and in 2027 to 5.1%.
In 2025, spending on national defence and internal security will account for about 40% of total budget expenditures. This indicates that Russia continues to put its economy on a war footing. Defence spending will exceed the total expenditures on education, healthcare, social programmes and the economy.
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At the same time, the budget envisages an increase in spending on classified or unspecified items to 12.9 trillion rubles in 2025, up from 11.1 trillion rubles planned for this year. These items may include elements related to military needs. Thus, the share of classified expenditures will remain at 30% of the total budget. If we assume that most of these expenditures will also be used to finance the war and weapons, then Russia’s total defence spending in 2025 will amount to 70% of the state budget, or about $280 billion.
The draft budget of the Russian Federation also envisages reducing the deficit to 0.5% of GDP in 2025. This is based on the expected increase in revenues not from oil and gas, but due to the introduction of a more progressive income tax and higher revenues from value added tax, excise and customs duties.
Personal and corporate income taxes are expected to bring in another RUB 2.6 trillion in 2025. However, even with these forecasts, the budget deficit may be higher than expected. For 2024, the budget deficit is projected at 1.7% of GDP, which is 0.6 percentage points higher than in the previous June amendments.