Russia's war against Ukraine drives budget deficit to record levels
Russia is spending more on the war than planned as the budget deficit hits a record since the start of the invasion (photo: Getty Images)
Russia will spend $28 billion more on the war this year than originally planned. The budget deficit is already hitting record levels, and the Finance Ministry has begun asking the government to freeze spending in all other areas, The Financial Times reports.
Russia's Finance Minister Anton Siluanov appealed to the government as early as February with a request to freeze planned spending in many areas. The reason is rising military expenditures, which are proving insufficient even with record defense funding.
This year, 16.84 trillion rubles have been allocated to the military and security sector — nearly 40% of Russia's entire state budget, or $238 billion. But even that is not enough.
Deficit hits records
Russia planned to end 2026 with a budget deficit of 3.8 trillion rubles. However, in just the first four months of the year, it reached 5.9 trillion rubles — 2.5% of GDP.
This is the largest deficit since the start of the full-scale invasion of Ukraine.
In February, the Finance Ministry estimated an additional shortfall of 2 trillion rubles due to war-related spending. Under a negative scenario, it could rise to 4 trillion rubles and remain at that level in 2027–2028.
Freezes and cuts
In a letter to the Cabinet, Siluanov asked for spending worth 2.9 trillion rubles to be frozen this year. By 2028, that amount could grow to 7.1 trillion rubles, according to ministry estimates.
Back in January, the ministry separately asked state institutions to cut non-essential spending by 10% to contain the growing deficit. Defense and social spending were not affected.
What economists say
Economists say that while Russia's economy remains stable, growing concern is centered on the federal budget, which has become a key topic in public debate, central bank discussions, and government circles. Rising deficits are also fueling uncertainty over future taxes, tariffs, and spending priorities.
Former Russian Central Bank official Alexandra Prokopenko said Siluanov's request highlights the Kremlin's priorities. According to her, the Finance Ministry is seeking additional funds for the war effort, meaning that spending cuts are likely to affect procurement programs, corporate subsidies, and state institutions rather than defense and security expenditures.
Meanwhile, the United Kingdom blocked cryptocurrency schemes through which Russia was moving $90 billion annually — half of its war budget. Six financial platforms and four individuals involved in circumventing restrictions were placed under sanctions.
The pace of Russian military advances in 2026 has fallen sharply compared to last year — since the beginning of the year, Russian forces have captured only 104 square kilometers, compared with 1,619 square kilometers during the same period in 2025. According to ISW, military commanders are presenting the Kremlin leader with a distorted picture of battlefield successes.
