The Russian government has announced plans to increase its military spending by 27 percent in 2027, with a total defence budget of 17.1 trillion roubles ($202.58 billion). This is the highest figure since the start of the war in Ukraine in 2022. The increased spending is part of a larger defence budget that will total 50 trillion roubles over the next three years.
The Russian government's defence spending plans have been revealed in government documents seen by Reuters. The documents show that the government's original budget for 2027 was 13.5 trillion roubles, but this has been increased to 17.1 trillion roubles. In 2026, the government planned to spend 12.1 trillion roubles on defence, but the actual amount is classified and will not be disclosed.
The increased defence spending is part of a larger increase in government spending, with total budget spending in 2026 set to increase by 13.2 percent to 48.6 trillion roubles. This represents 20.9 percent of Russia's gross domestic product (GDP). The government has also raised its estimate for its 2026 budget deficit to 3.2 percent of GDP, from 1.6 percent of GDP previously.
The Russian government is expected to submit its draft budget to parliament by October 1. The government has announced plans for new tax hikes in 2027 to finance the growing deficit. A new windfall tax on metals and mining companies is expected to raise about 200 billion roubles annually.
The government documents also reveal that state debt is set to rise to 21.7 percent of GDP in 2027 from 19.9 percent of GDP in 2026. This is above the 20 percent level seen as safe by the authorities. Total borrowing in 2027 will increase by 43 percent to 7.7 trillion roubles.
In 2026, the government will increase its net borrowing plan by 26 percent to 5 trillion roubles. It will also spend 459 billion roubles, about 11 percent of the liquid part of its National Wealth Fund, to reduce the deficit. The government has also cut its oil and gas revenue estimate for 2026 to 7.6 trillion roubles from 8.9 trillion roubles previously.
The increased military spending and government borrowing plans come as Russia continues to face challenges from the ongoing conflict in Ukraine. The Russian government's budget plans are being closely watched by international observers, who are concerned about the potential economic implications of the increased spending.
Key points
- Russia plans to spend $202.58 billion on defence in 2027, a 27 percent increase from the original budget.
- The Russian government's total defence spending will amount to 50 trillion roubles over the next three years.
- The government's state debt is set to rise to 21.7 percent of GDP in 2027 from 19.9 percent of GDP in 2026.
