Moscow prepares belt-tightening amid war in Ukraine, Reuters says

Moscow is preparing to raise taxes and cut spending in order to maintain record-high defence expenditures.

Source: Reuters

Details: Russia is facing a growing budget deficit due to its exhausting war against Ukraine and falling oil and gas revenues. 

Officials and economists say the Kremlin plans to increase taxes and reduce social programmes to finance military needs.

In 2025, around RUB 17 trillion (about US$211.4 billion) – 41% of all state spending – has been allocated for defence and security, the highest share since the Cold War. This has already fuelled inflation, record-high interest rates and the threat of recession.

Anatoly Artamonov, head of the upper house of Russian parliament's budget committee, warned that in the next three years Russians "will not have enough means to live as comfortably as we do now" as spending on education and healthcare is reduced. Economists forecast further tax pressure and economic stagnation.

Background: 

• Russia’s economic growth has stalled, oil revenues have fallen, and the budget deficit has reached its highest level in three decades. Inflation and interest rates remain painfully high.
• On 12 August, the Russian government prepared an urgent meeting with representatives of the country’s largest oil companies over a fuel market crisis, where prices have surged by nearly 50% since the start of the year.

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