Russia’s military budget hits an all-time high as the economy struggles to keep up

Today, the biggest news comes from the Russian Federation.

Russia plans to allocate seventeen point one trillion rubles, which equals approximately two hundred billion dollars, to national defense in two thousand and twenty-seven. This marks an almost forty-three percent increase from the twelve trillion rubles planned for two thousand and twenty-six. Military spending would equal six point nine percent of GDP and thirty-five percent of all federal budget expenditure. Ukraine’s military intelligence reported that around one hundred and forty-six billion dollars is planned for weapons and military equipment for Russian forces.

However, increasing military spending comes at enormous cost, as economic growth slows and oil and gas revenues fall. Ukrainian strikes on oil infrastructure add pressure by disrupting refining and fuel deliveries, while military spending keeps rising. During the war, the Russian authorities have actively increased the tax burden, both by raising traditional taxes and by introducing levies. Higher tax revenues have not prevented the deficit from widening because government spending has risen even faster. Moscow is therefore planning further tax increases and more borrowing, while continuing to draw on its wartime savings. Non-military spending was already cut by thirty-five percent this year, and it will also need to be decreased next year by at least thirteen percent to finance the war.

These measures will hurt the civilian sector of the Russian economy further, as there will be even less money to invest in public infrastructure. The Russian population will also need to bear the burden of the increased military spending, as Russia cannot borrow internationally, which means that the Russians themselves need to pay higher taxes and buy government bonds. However, the government repeatedly failed to sell short-term bonds in auctions, indicating that the population will need to finance Russia’s growing budget deficit.

Because of the ever-increasing debt burden, borrowing becomes more expensive and consumes money available for other spending. To solve this, Russia might need to print billions of rubles to finance it, which will stoke inflation even further or force it to devalue its currency, which will make imports for ordinary Russians even more expensive. The decrease in state pensions, maternity, and family benefits will also make the life of ordinary Russians even more difficult financially. Eleven percent of Russia’s small businesses are already unable to pay their debts, which will lead to shop closures, leaving business owners without income.

Despite increasing its military budget from year to year, Russian progress on the frontline slowed down in two thousand and twenty-six. The Kremlin is committing more money to replace losses, pay troops and sustain weapons production as it seeks further advances. With this increased spending, Russia seeks to break the deadlock on the frontline and advance deeper into Ukraine. Additionally, Russia plans to produce thousands of drones and hundreds of missiles monthly, which would allow it to destroy civilian infrastructure in every major Ukrainian city to force the population to leave their homes and potentially force the Ukrainian government to capitulate to Russian demands. However, higher prices, equipment shortages and the need to replace losses can absorb much of the increase before it produces additional fighting power.

Overall, Russia’s record military budget shows that the Kremlin is willing to sacrifice more civilian spending to sustain the war. That commitment gives Moscow resources to keep fighting, but it does not guarantee the breakthrough Putin wants. Ukraine and its partners therefore cannot rely on economic pressure alone to stop Russian attacks. If Ukrainian defenses continue denying decisive gains, Moscow will face an increasingly costly choice between funding a prolonged war and meeting the needs of its own population.