Sergei Shelin is a Russian socio-economic analyst.
The Government of the Russian Federation recently announced a regime raw savingswhich was approved by the Kremlin. Almost immediately, however, military spending rose to record levels, causing financial imbalances to plummet. Putin suddenly lost the desire to save.
The novelties constituted a kind of reform aimed at radical cuts in state spending. It was clearly mature, had been prepared by technocrats for a long time and, judging by Prime Minister Mikhail Mishtustin's account, it was approved by Putin.
Despite continuous tax increases, in 2025 the federal budget was closed with a very large deficit (5.6 trillion rubles, i.e. approximately PLN 267 billion at the current exchange rate). And the consolidated budget deficit (8.3 trillion rubles, 3.9 percent of GDP, or approximately PLN 396 billion) was simply unprecedented. A repeat in 2026 does not bode well for the Russian economy. Therefore, the February reform seemed rational.
Only a few weeks have passed, and taxpayers are learning that the cumulative federal budget deficit increased by 1.1 trillion rubles (PLN 52 billion) in March alone. In the first three months of 2026, it already amounted to PLN 4.6 trillion (PLN 219 billion). This is much more than the planned deficit for the entire current year (3.8 trillion rubles, i.e. approx. PLN 181 billion). The amount more than doubles both previous record quarterly wartime deficits.
In 2023 and 2025, deficits in the first three months of the year amounted to 2 trillion rubles (PLN 95 billion), and these indicators were perceived as very problematic. The authorities reassured the public by claiming that there are always some pre-emptive expenses at the beginning of the year (they meant military orders), and then everything returns to normal and people manage to make ends meet.
Firstly, in 2025 it was no longer possible to make ends meet. Second, in 2026, funding becomes more and more “ahead” with each passing month: In the first week of April, daily federal spending was one and a half times higher than in February and March, and 1.6 times higher than in April of last year.
“Dramatic character”
This outbreak of extravagance is obvious Putin's improvisationwhich undermines what he himself ordered quite recently. Under the budget bill, federal spending should increase by just 2.8 percent this year. in nominal terms, i.e. will decrease in real terms.
And the February reform promised to limit the so-called unprotected expense items by another 10 percent.
“The government seems to be preparing to radically increase spending. The budget situation has become truly dramatic,” writes the analytical channel on Telegram, MMI. And indeed. At the rate at which the government is spending money, the annual plan will be exceeded by a good 8 trillion rubles (PLN 382 billion). But let's be careful and assume that it's only by PLN 5 trillion (PLN 239 billion).
MMI forecasts the exceedance even more precisely – from 3 trillion rubles (PLN 143 billion) upwards. However, the information arriving each week shows that the scale of Putin's spending is greater than could be expected.
And you can see some sense in this. Each year of the invasion, Putin increased war spending. For example, in 2025 it increased spending on “national defense” by 3 trillion rubles. However, in the 2026 budget he suddenly agreed to include a reduction in these expenses by a full PLN 1 trillion (PLN 47 billion). Technocrats and state financiers assured him that otherwise they simply would not be able to make ends meet.
However, the leader changed his mind and decided not to go against his instincts. The above-mentioned additional 5 trillion rubles will restore “national defense” to the growth rate known to the regime and allow the war to continue unimpeded.
False hope for Russia
This turn is all the more interesting because Putin is by no means a layman in finance and is able to understand the concerns of his professionally trained associates. He knows that the budget situation was quite bad last year, and that in the first quarter of this year it got even worse. The president not only knows, but also talks about it:
“Statistical data show that, unfortunately, economic dynamics have been declining for two months in a row. Overall, in the period January-February, GDP shrank by 1.8 percent, […] the trajectory of macroeconomic indicators remains below expectations for now […] not only experts and analysts, but also forecasts of the government itself, as well as the central bank of Russia.
Non-oil and gas budget revenues in the first three months of 2026 deviated significantly from the plan and turned out to be nominally only 7.1 percent. higher than in the same period last year. This means that in real terms they rather decreased, despite the tax increase. On an annual basis, the shortfall in these revenues may amount to 3-4 trillion rubles (PLN 143-191 billion).
However, oil and gas revenues fell by 45.4% in January-March. The increase in fuel prices will only be reflected in April. However, it is the expectation of profits from this growth that explains the current growth the momentum of Russian spending.
These expectations are poorly justified.
Indeed, the price of Russian Urals oil ranged between $110 and $120. (between PLN 396 and PLN 432) per barrel.
These are the quotations from the historically record year 2013, when the average monthly export sales of energy raw materials (oil, petroleum products, gas and coal) amounted to approximately USD 30 billion. (PLN 108 billion), over half of which then went to the Russian budget.
In March, the first month of the US-Israeli war against Iran, Russian influence was below this maximum, but will likely approach it in April. And if we assume that this paradise for the Russian budget will have no end and that 1-1.5 trillion rubles (PLN 47-71 billion) of above-planned revenues will actually start flowing into the Kremlin's treasury per month, this will amount to 8-12 trillion rubles (PLN 382-573 billion) in the rest of the year.
Everyday life in Moscow, April 7, 2026.Igor IVANKO / AFP / AFP
Putin changes his mind
At the end of 2026, additional profits will cover both the expected increase in military spending (by PLN 5 trillion, or approximately PLN 238 billion) and the shortfall in revenues from sectors other than oil and gas (by PLN 3-4 trillion, or approximately PLN 143-191 billion).
However, the likelihood of such long-term benefits is minimal. It would have to contribute to it several favorable circumstances for Putin: that the Strait of Hormuz be blocked at least until the end of the year to prevent alternative fuel supply routes from becoming operational. And so that Russia can export oil and petroleum products without obstacles and in the current quantities.
None of these factors are at all guaranteed.
Let's say that Ukrainian attacks on port terminals and refineries are already reducing Russian oil production and exports – even by a few percent compared to last year, and not by tens of percent, as is sometimes claimed. And these attacks will increase.
Putin's decision to increase military spending does not correspond to his current capabilities and is based on poorly justified hopes. It is contrary to economic logic and worsens the situation in the Russian economy, where the mood is already bad.
Logically, unproductive military spending should be reduced, not increased. But Putin has a stronger asset in his hand.
It is very instructive to observe how the economic life of a huge country adapts without opposition to the next turn of the autocrat's moods. In February, Putin listened to his financiers and approved a reform aimed at saving public funds. In March, he changed his mind and ordered a counter-reform. In April, he gave in and began to spend even more generously on the war.
In May or June he can easily change course again – and again he will encounter no obstacles. The main law of the Russian economy is to adapt to the ruler's improvisation.
