Russia Lifts 2027 Defense Spending to 17.1 Trillion Roubles
Russia's draft budget would direct 17.1 trillion roubles — about $202.6 billion — to defense in 2027, a planned increase of roughly 27% over the 13.5 trillion roubles, or $159.8 billion, originally budgeted for that year. Government documents seen by Reuters show the figure would be the highest since Russia's full-scale invasion of Ukraine began in 2022, a sign that military needs continue to outrank other claims on the federal treasury.
The new number also dwarfs the 12.1 trillion roubles the government had penciled in for defense in 2026. Officials have not disclosed what was actually spent this year, and the documents indicate that figure is classified.
A Three-Year Commitment Approaching 50 Trillion Roubles
Over the coming three years, the documents project total defense outlays of 50 trillion roubles, or approximately $591.7 billion. Taken together with the 2027 jump, the plan suggests the government expects to sustain a high tempo of military expenditure well beyond the current budget cycle rather than treating it as a temporary surge.
The documents also note that a portion of military-related spending sits outside the official defense line, recorded in other sections of the budget. That means the headline figures, however large, may understate the full scale of resources moving toward the armed forces and related programs.
2026 Outturn Kept Out of Public View
Transparency around Russian budget execution has narrowed since 2022, and the decision to classify actual 2026 defense spending follows that pattern. Outside analysts are left to work from planned allocations, borrowing totals and tax measures rather than realized expenditure — a gap that makes year-on-year comparisons harder to draw with confidence.
Deficit Estimate Doubles for 2026
The same documents show the government raising its 2026 deficit projection to 3.2% of gross domestic product, up from 1.6% of GDP previously — a doubling of the expected shortfall in a single revision. Total budget spending for 2026 is set to climb 13.2%, reaching 48.6 trillion roubles, equivalent to 20.9% of GDP.
The draft budget is expected to be submitted to parliament by Oct. 1, setting the stage for lawmakers to begin formal consideration of the fiscal plan within days.
Tax Hikes and a Windfall Levy on Mining
To help pay for the widening gap, the government announced plans last week for new tax increases in 2027. Among them is a windfall tax on metals and mining companies, which the documents estimate would bring in around 200 billion roubles, or $2.4 billion, each year.
The levy is one of several revenue-raising measures accompanying the spending plan. Rather than covering the full shortfall from new taxes alone, the government appears to be assembling a mix of corporate charges, debt issuance and reserve drawdowns to keep the financing arithmetic in balance.
Borrowing Rises as Oil Revenue Forecast Slips
Alongside the tax measures, the government plans to lean harder on debt markets and its accumulated savings. The documents lay out several key movements:
- Net borrowing in 2026 would rise 26% to 5 trillion roubles.
- Roughly 459 billion roubles — about 11% of the liquid portion of the National Wealth Fund — would be spent to narrow the deficit.
- The 2026 oil and gas revenue estimate has been cut to 7.6 trillion roubles from 8.9 trillion roubles previously.
- State debt is projected to reach 21.7% of GDP in 2027, up from 19.9% in 2026.
- Total borrowing in 2027 would increase 43% to 7.7 trillion roubles.
Debt Crosses a Self-Imposed Threshold
The projected 21.7% debt-to-GDP ratio for 2027 pushes past the 20% level that Russian authorities have previously described as safe. It also marks a notable step up from the 19.9% expected in 2026, illustrating how quickly the fiscal cushion has thinned during the war years.
The reduced oil and gas forecast compounds that picture. Hydrocarbon receipts have long been a pillar of Russian budget revenue, and a downgrade of more than a trillion roubles for 2026 implies less room to absorb new spending commitments without additional borrowing or taxation. The 43% jump in total borrowing planned for 2027 shows how much of the burden is being pushed into future years.
What the Budget Papers Reveal
Read as a whole, the documents describe a state funding a large military effort through a combination of higher taxes, expanded borrowing and drawdowns from sovereign savings. Each lever carries its own constraint: taxes compress corporate margins, borrowing raises future interest costs, and reserve spending reduces the buffer available for the next shortfall.
The direction of travel is also notable. Defense allocations are climbing at a double-digit pace even as oil and gas revenue expectations fall and the deficit widens, which places the fiscal burden squarely on domestic revenue measures and debt markets. The classification of actual 2026 defense spending means the public record will capture only part of the picture.
The Road to Parliament
With the draft due by Oct. 1, attention turns to how lawmakers handle the package and whether the tax provisions survive intact. The 2027 defense figure would sit at the peak of a three-year envelope worth 50 trillion roubles, and the borrowing schedule implies that the government expects to keep tapping markets well past the current year.
The budget documents do not spell out the operational uses of the money, and no breakdown of programs or procurement categories was included in the figures seen by Reuters. What the numbers do establish is scale: a 27% single-year increase, a three-year total approaching $592 billion, and a financing plan that now runs above the debt level authorities have called safe.
This article is based on reporting by Defense News. Read the original article.
Originally published on defensenews.com
