Russia's opposition balks at soaring defence budget increase
An unusual situation has occurred in Russia: the Communist Party of the Russian Federation and the "Just Russia – For Truth" group have almost unanimously opposed the country's new financial plan, reports "Rzeczpospolita." The budget proposal includes a 30% increase in spending on wartime activities led by Vladimir Putin.
6:32 AM EST, November 22, 2024
For 2025, defense spending is projected to reach 13.5 trillion rubles (approximately $134 billion USD), representing a 30% increase compared to the current year. This amount constitutes 6.31% of Russia's GDP.
Russia's wartime budget
In the following year, defense spending is expected to be 12.8 trillion rubles (about $127 billion USD), and in 2027 it is projected to be 13.1 trillion rubles (around $130 billion USD). Altogether, Russia plans to allocate at least 40% of its budget to defense and national security from 2025 to 2027.
Since 2022, Moscow has comprehensively reoriented its economy toward wartime activities, which has involved intensive development of the military industry and a significant increase in employment in this sector. Russia's military budget for the current year has already reached a record high, exceeding the 2023 budget by 70%. Combined with investments in the security sector, it accounts for 8.7% of GDP.
The budget law still requires approval from the upper house of parliament, the Federation Council, and then President Vladimir Putin must sign it.
"According to data posted on the Duma's website, 77 deputies abstained from voting on the budget in the third and final reading. There was also one vote "against." The independent deputy Oksana Dmitriyeva dared to cast that vote," reports "Rzeczpospolita."
Central bank raises rates
As we reported on money.pl, in October, the central bank of Russia raised interest rates to 21%, the highest level in two decades. Market analysts predict they could rise to as high as 23% by the end of the year.
This is an unusual situation during wartime, as central banks typically avoid curbing economic activity. "The Economist" estimates that the Kremlin's actual war expenditures are significantly higher than those reported by the official Putin regime.
Nearly 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 emerged across the country.
