Russia is preparing to significantly boost its defense spending, allocating 17.1 trillion rubles (approximately $202.6 billion) for defense in 2027. This represents a 27% increase from the previously budgeted 13.5 trillion rubles and marks the highest level of defense spending since the onset of the war in Ukraine in 2022, according to recently released government budget documents.
Over the next three years, total defense spending is expected to reach 50 trillion rubles. However, some specifics of military expenditures remain classified, with certain military-related costs categorized under different budget sections. This planned increase in defense spending coincides with Russia facing a broader budget deficit, which the government projects will rise to 3.2% of GDP in 2026, up from an earlier estimate of 1.6%.
To manage the growing deficit and increased spending, Russia intends to engage in additional borrowing and implement new tax measures. Notably, a proposed windfall tax on metals and mining companies is expected to generate approximately 200 billion rubles annually. Consequently, state debt is projected to climb from 19.9% of GDP in 2026 to 21.7% in 2027, with total borrowing anticipated to increase to 7.7 trillion rubles next year.
The draft budget, which is expected to be submitted to Russia’s parliament by October 1, underscores defense spending as a major component of government expenditure. Total budget spending is projected to reach 48.6 trillion rubles this year, reflecting the government’s prioritization of defense amidst economic challenges.