Russia to hike defense spending by 23% amid falling oil revenue

Russian expenditures on defense and security are set to account for 32 percent of all budgetary outlays in 2025. Paying the salaries and wages of the military's administrative segment will constitute about 10 percent of the planned military expenditures.

Russia will increase its war budget in 2025 by 23 percent, from 10.8 trillion rubles planned for the current year to 13.5 trillion rubles (approximately $145 billion), Reuters reported on Monday, citing a published draft of the three-year budget. Additionally, revenues from oil and gas are expected to fall between 2025 and 2027.

According to the draft, expenditures on defense and security will account for 32 percent of all budgetary outlays in 2025. Paying the salaries and wages of the military's administrative segment will constitute about 10 percent of the planned military expenditures.

The budget draft also indicates that state budget revenues from oil and gas will fall to 10.9 trillion rubles ($117.3 billion) in 2025—5.1 percent of GDP—down from 11.3 trillion rubles (approximately $121.5 billion) planned for the current year. Economists from the Russian Ministry of Finance predict that these revenues will decrease to 10.56 trillion rubles (approximately $113 billion) in 2026 and 9.77 trillion rubles (approximately $105 billion) in 2027.

Earlier, the Bloomberg agency reported on Russia's planned increase in military spending, also noting that it will drop to 5.6 percent of GDP in 2026 and to 5.1 percent in 2027.

Russian Finance Minister Anton Siluanov announced that expenditures for the "special military operation in Ukraine"—as the Kremlin's war against that country is referred to in Russian propaganda—and support for the military are the most significant parts of next year's budget. Bloomberg previously noted that spending on the military exceeds allocations for education, healthcare, and social policy.