Russia Plans Record 17.1 Trillion-Ruble Defense Budget as War Costs Deepen Fiscal Strain

Russia plans to spend a record 17.1 trillion rubles ($202.6 billion) on defense in 2027 as Moscow prepares to devote an unprecedented share of its budget to the military.According to government documents seen by Reuters and figures cited by The Moscow Times, the planned spending is about 27% higher than the 13.5 trillion rubles previously projected for defense in 2027 and roughly 32% above the 12.9 trillion rubles allocated in the 2026 budget.JOIN US ON TELEGRAMFollow our coverage of the war on the @Kyivpost_official.Defense spending is expected to account for around 35% of Russia’s total federal expenditures next year – a post-Soviet record, according to The Moscow Times.The government’s draft three-year budget, approved this week, is expected to be submitted to the State Duma by Oct. 1.Moscow does not appear to be planning a significant reduction in military spending after 2027. The draft allocates 16.6 trillion rubles for defense in 2028 and 16.3 trillion rubles in 2029.Combined with the “National Security” category – which covers spending on the Interior Ministry, National Guard and security services – Russia’s security and defense apparatus is expected to consume 21.4 trillion rubles ($253 billion), or 43.9% of total spending, in 2027.Russia turns to taxes and borrowingThe sharp increase in military spending comes as Russia faces growing pressure on its budget.The government expects the 2026 budget deficit to reach 3.2% of GDP, up from an earlier estimate of 1.6%. Total government spending is projected to rise 13.2% to 48.6 trillion rubles ($576 billion), or 20.9% of GDP. Other Topics of Interest Mali Army, Russia’s Wagner Committed War Crimes Against Civilians, Amnesty Says Amnesty says Malian forces and Wagner killed and tortured civilians during joint operations, documenting at least 34 unlawful deaths. At the same time, the Finance Ministry has lowered its forecast for 2026 oil and gas revenues to 7.6 trillion rubles from 8.9 trillion rubles previously.To help finance the growing deficit, Moscow plans to increase borrowing. Net borrowing in 2026 is expected to rise 26% to 5 trillion rubles, while borrowing in 2027 is projected to reach 7.7 trillion rubles – a 43% increase.State debt is also expected to rise to 21.7% of GDP in 2027, from 19.9% in 2026, exceeding the 20% level previously viewed by Russian authorities as a safe threshold.The government is also preparing new tax measures.A new “windfall tax” on mining, metals and gold-mining companies is expected to generate around 200 billion rubles annually, or 600 billion rubles over three years, according to The Moscow Times.The authorities also plan to raise the top personal income tax rate on passive income, including bank interest, dividends and securities transactions, to 22%. Purchases from foreign online stores will also become subject to a 22% VAT.War bill approaches $900 billionThe rising defense budget comes on top of years of heavy war-related spending.According to calculations by Janis Kluge, an economist at the German Institute for International and Security Affairs, Russia spent around 57 trillion rubles ($676 billion) on the war and related expenditures between the beginning of 2022 and mid-2026.That figure represents roughly 28% of Russia’s current GDP and is equivalent to more than three decades of funding for the country’s entire higher-education system, according to The Moscow Times.If current spending continues, cumulative war-related expenditures could reach around 74 trillion rubles – approximately $876 billion – by the end of 2027.That would exceed the value of Russia’s gold and foreign-currency reserves, which stood at around $748.2 billion. Kyiv Post is Ukraine’s first and oldest English news organization, reporting since 1995. Its international reach – 97% of readers are outside of Ukraine – make it truly Ukraine’s global voice.