Russia plans massive boost in defence spending by 2025
Russia's budget plan for the coming year includes a record increase in spending on defence and security departments. On Thursday, the State Duma, the lower house of parliament, completed its work on the law, which covers the years 2025-27.
In 2025, defence spending is projected to be 13.5 trillion roubles (€127 billion), marking a 30% increase compared to the current year. This amount constitutes 6.31% of Russia's GDP.
Meanwhile, in 2026, military spending is expected to be 12.8 trillion roubles (€121 billion), and in 2027, it is projected to be 13.1 trillion roubles (€123 billion). Overall, Russia intends to allocate at least 40% of the budget to defence and national security from 2025-27.
War economy
Since 2022, Moscow has comprehensively reoriented its economy towards wartime activities, including the intensive development of the military industry and a significant increase in employment within this sector. Russia's military budget for the current year was already at a record high and exceeded that of 2023 by 70%. Together with investments in the security sector, it constituted 8.7% of GDP.
The budget law still requires approval from the upper house of parliament, the Federation Council, and then must be signed by Vladimir Putin.
As reported on money.pl, Russia's central bank raised interest rates to 21% in October, the highest level in two decades, and market analysts predict that they could rise to 23% by the end of the year. This is an unusual situation for wartime, as central banks typically avoid measures that could slow down economic activity. "The Economist" estimates that actual Kremlin spending on the war is significantly higher than officially reported by the Putin regime.
Almost 560,000 soldiers of the internal security forces, many of whom have been deployed in occupied Ukraine, are funded outside the defence budget. The same applies to private military companies that have emerged across the country.
