Russia's defense budget skyrockets with 30% boost in 2025
Record growth in defense and force ministry spending is planned for next year, according to Russia's budget draft. On Thursday, the lower house of parliament, the State Duma, completed work on the bill that covers the years 2025-27.
In 2025, defense spending is projected to be 13.5 trillion rubles ($133 billion), which represents a 30% increase compared to the current year. This amount accounts for 6.31% of Russia's GDP.
Meanwhile, in 2026, military spending is expected to reach 12.8 trillion rubles ($126 billion), and in 2027, 13.1 trillion rubles ($129 billion). In total, Russia intends to allocate at least 40% of the budget to defense and national security over the years 2025-27.
War economy
Since 2022, Moscow has thoroughly reoriented the economy towards wartime activities, which has included 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 and exceeded 2023 levels by 70%. Along with investments in the security sector, it constituted 8.7% of the GDP.
The budget law still needs approval from the upper house of parliament, the Federation Council, and then must be signed by Vladimir Putin.
The central bank of Russia raised interest rates in October to 21%, the highest level in two decades. Market analysts predict they could rise to even 23% by the end of the year. This is an unusual move during wartime when central banks typically avoid constraining economic activity. "The Economist" estimates that the actual Kremlin expenses on the war are much higher than officially reported by Putin's regime.
Almost 560,000 soldiers from internal security forces, many of whom have been deployed in occupied Ukraine, are funded outside the defense budget. The same applies to private military companies that have been established across the country.
