Russia intends to allocate 17.1 trillion rubles (approximately $202.58 billion) for defense in 2027, reflecting a 27% increase from the initially proposed budget of 13.5 trillion rubles. This marks the highest defense budget since the onset of the Ukraine conflict in 2022, as reported by government documents reviewed by Reuters.
Total defense spending is projected to reach 50 trillion rubles over the next three years. While the Russian government had planned to spend 12.1 trillion rubles on defense in 2026, the actual figure remains classified and will not be disclosed. Additionally, some military expenditures may be incorporated into other budget categories.
The same documents indicate that the government has raised its budget deficit estimate for 2026 to 3.2% of GDP, up from the previous estimate of 1.6%. Budget expenditures for 2026 are expected to increase by 13.2%, totaling 48.6 trillion rubles, which is equivalent to 20.9% of GDP.
The Russian government is anticipated to present the budget proposal to parliament by October 1. Last week, it announced plans for new tax increases in 2027 to address the growing deficit. Documents also reveal that a new tax on exceptional profits from companies in the metallurgical and mining sectors is expected to generate around 200 billion rubles annually.
Furthermore, the documents indicate that in 2026, the government will increase its net borrowing plan by 26%, reaching 5 trillion rubles, and will utilize 459 billion rubles—about 11% of the liquid assets of the National Wealth Fund—to mitigate the deficit. Additionally, the revenue estimates from oil and gas for 2026 have been reduced from 8.9 trillion rubles to 7.6 trillion rubles.
According to the documents reviewed by Reuters, public debt is expected to rise to 21.7% of GDP in 2027, up from 19.9% in 2026, surpassing the 20% threshold considered safe by authorities. Total borrowing in 2027 is projected to increase by 43%, reaching 7.7 trillion rubles.
