Finance minister warns Putin of budget collapse risk over Ukraine war
Photo: Vladimir Putin (Getty Images)
Russian Finance Minister Anton Siluanov and representatives of the Central Bank of Russia have warned Russian leader Vladimir Putin about increasing pressure on the budget due to military expenditures, Bloomberg reports.
Budget crisis deepens
Senior officials from Russia’s financial bloc informed the country’s leadership that the current structure of military spending carries the risk of a rapidly growing budget deficit.
According to them, the Finance Ministry and the Central Bank of Russia insist on the need to review defense spending and are proposing options for cuts.
The officials believe that without optimizing government expenditures, stabilizing finances will be extremely difficult.
Disagreements within the government
The financial bloc’s proposals have met resistance from the defense ministry and parts of the political leadership.
They believe that reducing defense spending could harm the defense industry and disrupt the execution of designated tasks.
According to sources, part of the discussions concerns reallocating the budget to other areas, while final decisions remain with the President.
Economic pressure
Some estimates suggest that Russia’s budget deficit could reach trillions of rubles this year. At the same time, the economy is slowing down, while growth forecasts are being revised downward.
Additional pressure comes from sanctions, unstable export revenues, and shrinking reserves that previously helped cover the deficit.
The government has already been forced to raise taxes and revise budget parameters.
A difficult choice for the Kremlin
Experts and government sources note that Moscow is facing the need either to cut spending or find new sources of revenue.
At the same time, key fiscal policy decisions depend directly on the President’s position.
The Russian economy is showing a noticeable slowdown amid the ongoing war and Ukrainian drone strikes, which are adding pressure on key sectors. Against this backdrop, Vladimir Putin is opening the fifth St. Petersburg International Economic Forum since the start of the full-scale invasion, seen as a platform for seeking new sources of economic growth.
