Russia's soaring deficit: War costs drive budget strain
Russia is recording a budget deficit exceeding 3 trillion roubles for the third consecutive time. The main reason is the cost of the war in Ukraine, reports "Puls Biznesu." In 2024, the deficit amounted to 3.49 trillion roubles, almost double the planned level.
According to data from the Russian Ministry of Finance, Russia's budget deficit in 2024 reached 3.49 trillion roubles, which corresponds to approximately £28.5 billion. State revenues increased by 26% to 36.71 trillion roubles, while expenditures rose by 24.2% to 40.19 trillion roubles. This information was provided by "Puls Biznesu."
In relation to GDP, the deficit decreased from 1.9% to 1.7%, but it is still significantly higher than the assumptions of the Russian Finance Ministry, which forecasted a deficit of 0.9% of GDP. This value was expected to be around 1.6 trillion roubles. Excluding oil and gas revenues, the deficit rose to 7.3% of GDP.
Nearly half of the budget for the military
In 2025, defence spending is projected at 13.5 trillion roubles (approximately £110 billion), representing a 30% increase compared to the current year. This amount accounts for 6.31% of Russia's GDP.
Meanwhile, in 2026, military spending is planned to be 12.8 trillion roubles (around £104 billion), and in 2027 - 13.1 trillion roubles (about £106 billion). Overall, Russia intends 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 war operations, including the intensive development of the military industry and a significant increase in employment in this sector. Russia's military budget for the current year was already at a record high, exceeding the 2023 level by 70%. Along with investments in the security sector, it accounted for 8.7% of GDP.
