Russia has announced plans to significantly increase its military spending in 2027, with a budgeted amount of 17.1 trillion roubles, equivalent to $202.58 billion. This represents a 27% increase from the original 13.5 trillion roubles budgeted for 2027. The new figure is the highest since the start of the war in Ukraine in 2022. According to government documents seen by Reuters, the increase in military spending is part of a broader expansion of Russia's defence budget.
The total defence spending for the next three years is expected to amount to 50 trillion roubles. In 2026, the government had planned to spend 12.1 trillion roubles on defence, but the actual amount spent is classified and will not be disclosed. Some military spending can also be accounted for in other parts of the budget, adding to the overall defence expenditure. The increase in military spending comes as Russia continues to face challenges in Ukraine.
The Russian government's budget documents also revealed an increase in the estimated 2026 budget deficit to 3.2% of gross domestic product, up from 1.6% of GDP previously. The budget spending in 2026 is expected to increase by 13.2% to 48.6 trillion roubles, or 20.9% of GDP. The government is expected to submit the draft budget to parliament by October 1. The budget documents provide insight into Russia's economic plans.
To finance the growing deficit, the government announced plans for new tax hikes in 2027. A new windfall tax on metals and mining companies is expected to raise about 200 billion roubles annually. The documents also showed that the government will increase its net borrowing plan by 26% to 5 trillion roubles in 2026. The government plans to spend 459 billion roubles, about 11% of the liquid part of its National Wealth Fund, to reduce the deficit.
The government's budget documents also revealed a cut in the oil and gas revenue estimate for 2026 to 7.6 trillion roubles, down from 8.9 trillion roubles previously. The state debt is set to rise to 21.7% of GDP in 2027, up from 19.9% of GDP in 2026. This is above the 20% level seen by the authorities as safe. The increase in state debt reflects the government's growing reliance on borrowing.
In 2027, total borrowing is expected to increase by 43% to 7.7 trillion roubles. The government's budget plans have been closely watched by investors and analysts, who are keen to understand the implications of the increased military spending and tax hikes. The budget documents provide a detailed insight into Russia's economic plans and priorities.
The increase in military spending and tax hikes comes as Russia faces ongoing challenges in Ukraine and a growing budget deficit. The government's budget plans are aimed at supporting the country's economic growth and stability. The budget documents revealed that the government is taking steps to manage its finances and reduce the deficit.
Key points
- Russia plans to spend $202.58 billion on defence in 2027, up 27% from original budget.
- The total defence spending for the next three years is expected to amount to 50 trillion roubles.
- The government announced plans for new tax hikes in 2027 to finance the growing deficit.
