Russia may raise military spending by 40% despite budget hole

The Russian government plans to significantly increase military spending in 2026, even though the budget deficit had reached RUB 6 trillion (more than US$81.7 billion) by early June and exceeded the figure for the whole of last year.

Source: The Moscow Times, an independent Amsterdam-based news outlet

Details: War spending may be 40%, or RUB 4-5 trillion (US$54.4-68 billion), higher than planned. The military budget could rise to almost RUB 18 trillion (US$244.8 billion).

Russia's budget initially allocated RUB 12.9 trillion (US$175.4 billion) to "national defence", slightly less than a year earlier. If spending is increased, it will account for around 41% of all planned Russian treasury expenditure.

Together with spending on "national security", which includes the budgets of the Interior Ministry, Rosgvardiya (Russia's National Guard), the Investigative Committee (Russian federal law enforcement agency) and the intelligence services, the security bloc could receive RUB 21.8 trillion (US$296.4 billion), almost half of the entire budget.

To achieve this, the Kremlin is preparing cuts to civilian spending, the use of reserves and additional borrowing through government bonds.

Background:

• Russia's federal budget deficit has increased significantly, exceeding its annual target by one and a half times.
• The budget shortfall for January-April amounted to RUB 5.88 trillion (about US$78.9 billion or 2.5% of GDP), nearly RUB 3 trillion (US$40 billion) higher than in the same period last year and RUB 1.3 trillion (US$17.5 billion) more than in January-March.

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