Despite the “hole” in the budget: The Kremlin is preparing to increase war spending by 40%
18 June 14:21
The Russian government plans to sharply increase military spending this year, despite a budget deficit that reached 6 trillion rubles by early June and exceeded the total for all of last year. War-related spending in the 2026 budget could end up being 40%, or 4–5 trillion rubles, higher than planned, Bloomberg reports, citing sources familiar with the discussions, according to "Komersant Ukrainian".
The budget law initially allocated 12.9 trillion rubles under the “national defense” line item—slightly less than the previous year, when military spending totaled 13.5 trillion rubles. In reality, however, the 2026 military budget could swell to nearly 18 trillion rubles, or 41% of all planned government spending (44 trillion rubles).
Taking into account the “national security” category—which includes the budgets of the Ministry of Internal Affairs, the Russian Guard, the Investigative Committee, and the special services—total budget spending on security forces could reach 21.8 trillion rubles and account for nearly half the budget.
To finance military spending in excess of the plan, the government is preparing cuts to civilian spending categories and also plans to use accumulated reserves, according to Bloomberg sources. The government intends to raise about half of this amount—2–3 trillion rubles—through additional borrowing by issuing government bonds.
Last week, the State Duma passed a law allowing the Cabinet to exceed this year’s spending and public debt limits without amending the budget law. This was preceded by the disappearance from the public eye of Central Bank Governor Elvira Nabiullina, who missed the St. Petersburg Economic Forum and meetings with Vladimir Putin, citing illness.
The Russian Central Bank, which Nabiullina has led since 2013, is de facto forced to use its own funds to plug the budget gap. The Central Bank conducts transactions with commercial banks: the banks purchase federal government bonds (OFZs), use them as collateral to obtain loans from the Central Bank, and then use the funds received to purchase more OFZs. As a result, Russia’s national debt remains on the Central Bank’s balance sheet, Bloomberg notes. The volume of such transactions has reached 4.6 trillion rubles.
Nabiullina’s absence has sparked a wave of rumors that she asked to resign, citing her unwillingness to work under conditions of a mobilization economy, lockdowns, and border closures, among other things. According to Bloomberg, senior officials at the Central Bank and the Ministry of Finance had previously warned Putin that rising war costs were becoming unsustainable for the budget and the economy. They called for curbing military spending, but Putin, according to the agency’s sources, sided with the Ministry of Defense, which insisted not only on maintaining but also on increasing funding.
In fact, federal budget spending on the war reached 5.908 trillion rubles in the first quarter, according to calculations by Janis Klug, a research fellow at the German Institute for International Security Affairs, based on data from the Ministry of Finance .
Compared to the same period last year, spending on the military and weapons production increased by 29.9%; compared to January–March 2024, it rose by 68.7%; by 129% compared to 2023, and by a factor of 4.6 compared to the first quarter of 2022. As a result, for the first time since the start of the conflict, military spending accounted for 46% of the budget and 65% of government revenue.
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