Key facts
- Russia's military budget is projected to reach 17 trillion rubles ($200 billion) in 2027.
- This represents a 27% increase from the 2026 military budget of 12 trillion rubles.
- Military and security forces will receive more funding than any other sector in the 2027 budget.
- Funding for healthcare, education, and social payments is set to decrease in 2027.
- Russia's budget deficit is planned to be cut to 2.2% in 2027, though past targets have been missed.
- Russia plans to raise taxes, including hiking VAT to 22% in 2026 and introducing a tax on dividends and bond yields from 2027.
Russia's government has submitted a three-year budget plan to parliament, proposing a significant increase in funding for its ongoing war in Ukraine. The overall military budget is slated to rise to approximately 17 trillion rubles (about $200 billion) in 2027, a 27% increase from the 12 trillion rubles allocated in 2026. When combined with spending on law enforcement, expenditures on military and security forces are set to account for 43% of the total government spending.
Experts caution that these figures, while substantial, may be misleading and suggest a strategy for sustaining a prolonged war rather than a sudden escalation. The planned budget hike for 2027, which is similar to the previous year's allocation, could indicate an intention to recruit more contract soldiers. The budget also shows a decrease in funding for healthcare, education, and social payments.
According to Sergey Aleksashenko, an exiled Russian economist, the published budget figures represent what the Kremlin intends to reveal, as additional funding can be allocated throughout the year without parliamentary approval. Pavel Luzin, a researcher, agreed that actual spending in 2026 likely exceeded the initial budget. While Russia does not release detailed military spending data, the increase in the 2027 budget is partly attributed to inflation within the military industry, as well as salaries and payments to soldiers and their families. The government is also investing in modernizing the sector, as the military industry's production capacity is not expected to exceed its 2024 peak.
The budget deficit is officially targeted to decrease to 2.2% in 2027, though Russia has historically missed its deficit targets. The country typically fills its deficit through its National Wealth Fund or domestic borrowing. However, attracting private investment in bonds has been challenging, with state-owned banks purchasing a significant portion of recent bond auctions. To fund the war, Russia has also increased taxes, including raising VAT to 22% in 2026 and planning new taxes on dividends and bond yields from 2027. Despite these financial measures, Aleksashenko believes there are no immediate economic problems that would compel Putin to halt the war, suggesting that while the cost may not be sustainable long-term, Putin finds the price acceptable.