Russia is planning a significant increase in its defense budget for 2027, with proposed spending reaching 17.1 trillion rubles, approximately $202.6 billion. This represents a 27% increase from the initially budgeted 13.5 trillion rubles and marks the highest level of defense spending since the onset of the conflict in Ukraine in 2022, according to government budget documents.
Over the next three years, Russia’s total defense expenditure is projected to amount to 50 trillion rubles. However, the specific amount allocated for defense in 2026 remains classified, and certain military expenses are accounted for under different budget categories.
This surge in defense spending comes amid a broader fiscal challenge for Russia, as the government anticipates a wider budget deficit. The deficit forecast for 2026 has been adjusted to 3.2% of GDP, up from an earlier estimate of 1.6%. In response, the total budget expenditure is expected to increase to 48.6 trillion rubles for the current year.
To address the growing deficit and increased spending, Russia plans to enhance its borrowing and implement new tax measures. One such measure is a proposed windfall tax on metals and mining companies, which is anticipated to generate approximately 200 billion rubles annually.
The country’s state debt is projected to rise to 21.7% of GDP by 2027, compared to 19.9% in 2026. Additionally, borrowing is expected to escalate to 7.7 trillion rubles in the upcoming year.
The draft budget, which underscores defense as a significant component of government spending, is scheduled to be submitted to Russia’s parliament by October 1. This financial strategy reflects the Russian government’s focus on bolstering its military capabilities despite economic challenges.