Kremlin faces parliamentary resistance over soaring war budget
An unusual situation has arisen in Russia, as the Communist Party of the Russian Federation and the "Just Russia – For Truth" group have almost unanimously opposed the country's new financial plan, reports "Rzeczpospolita." The budget proposal includes a 30% increase in spending on wartime activities conducted by Vladimir Putin.
22 November 2024 07:12
Defence spending is projected to reach 13.5 trillion roubles (approximately £110 billion) in 2025, a 30% increase from the current year. This sum constitutes 6.31% of Russia's GDP.
Russia's wartime budget
In the following year, defence spending is expected to be 12.8 trillion roubles (about £105 billion), and in 2027, it will be 13.1 trillion roubles (around £107 billion). Overall, Russia plans to allocate at least 40% of its budget to defence and national security from 2025 to 2027.
Since 2022, Moscow has comprehensively reoriented its economy towards wartime activities, which included intensive development of the military industry and a significant increase in employment in this sector. Russia's military budget for the current year has already reached a record high, exceeding the 2023 budget by 70%. Along with investments in the security sector, it accounted for 8.7% of GDP.
The budget law still requires approval from the upper house of parliament, the Federation Council, and then President Vladimir Putin must sign it.
"According to the data posted on the Duma's website, 77 deputies abstained from voting on the budget in the third and final reading. There was also one vote "against." The independent deputy Oksana Dmitriyeva dared to cast that vote," reports "Rzeczpospolita."
Central bank raises rates
As we reported on money.pl, in October, the Central Bank of Russia raised the interest rates to 21%, the highest level in two decades, and market analysts predict that they could rise to as high as 23% by the end of the year.
This is an unusual situation during wartime, as central banks usually avoid curbing economic activity. "The Economist" estimates that Kremlin's actual war expenditures are significantly higher than what the official Putin regime reports.
Nearly 560,000 soldiers from internal security forces, many of whom have been deployed in occupied Ukraine, are funded outside the defence budget. The same applies to private military companies that have emerged across the country.
