Russia is readying a lift in 2027 defense spending to 17.1 trillion rubles, or about $202 billion, according to someone familiar with the plans who requested anonymity because the numbers aren't public. Reuters was first to flag the larger allocation. At that size, military spending would comprise roughly 35% of a 48.8 trillion ruble overall budget - its largest proportion since the invasion started. Comparable figures for 2026 aren't available.
The shift reflects a costlier fight as both sides are hitting further behind the lines. Kyiv has leaned into drone and missile strikes inside Russia, zeroing in on refineries, logistics hubs and warehouses, prompting heavier investment in air defenses. Moscow has intensified strikes on Ukraine's Black Sea ports, power infrastructure and cities, including Kyiv, and is firing expensive ballistic missiles. That tracks with what looks like more money for drones and missiles.
Ukraine's attacks on Russian oil sites have produced a nationwide gasoline crunch and added friction to global fuel markets. Large drone barrages have strained Russian air defenses, even around Moscow. Air defenses stop the bulk of inbound drones, yet a few still penetrate.
Kremlin spokesman Dmitry Peskov said Monday that Kyiv would have to pay for "actions taken in recent months," according to Interfax. "The rise in spending comes as no surprise," said Evgeny Suvorov, chief economist at Moscow-based CentroCredit Bank. "It's not just about 'retaliatory strikes.' Simply put, more munitions are needed if the goals of the Special Military Operation are to be achieved." Russia's forces are taking heavy casualties for limited gains, and US attempts to broker an end to the war seem to be yielding little progress. That combination is feeding public anxiety that a new mobilization could follow, with this month's parliamentary elections now concluded.
When governments shift priorities, steady investors focus on protecting and growing their savings. Join Briefs Finance CEO Jaspreet Singh on September 29th for a FREE live investor workshop, How to Profit From A Dollar That's Losing its Value, where he shows how we're spotting investment opportunities as the dollar falls. Save your spot.
With the war bill swelling, the government now puts next year's deficit at 2.2% of GDP, up from a previously targeted 1.2%, and plans to plug it by once more hiking levies on households and companies. While the Finance Ministry didn't offer an immediate comment, it said last week the plan would ensure weapons and equipment for the armed forces, pay allowances and support families of service members, and modernize defense industry enterprises.
That comes alongside an earlier proposal for a new levy on the income of producers of gold, certain base metals, and fertilizers that have profited from higher world prices. Under the proposal, gold producers would face a 20% rate, while some other miners and fertilizer producers would be charged 30%.
For this year, Russia is set to end with a budget shortfall of 3.2% of GDP, about double the gap foreseen in the budget law. In 2026, net borrowing could reach 5 trillion rubles, 26% above what's expected by year end, and the government also plans to tap the National Wellbeing Fund for 459 billion rubles to help cover the gap.
Bigger war spending is reshaping where the Kremlin finds cash and where it sends it, showing up as wider deficits, fresh taxes and taps on sovereign savings. If the state leans harder on revenue grabs and borrowing while funding a long war, that can filter into inflation, financing costs and the ruble's trajectory, which eventually hits everyday prices, paychecks and savings.
Long term financial resilience comes from thoughtful planning, not reacting to headlines. Our CEO Jaspreet Singh is hosting a FREE live investor workshop, How to Profit From A Dollar That's Losing its Value, on September 29th. Sign up free to join him live.
