Russia on track to set new military spending records, though oil and gas revenues are expected to decline.
by Horsepankake
Russia on track to set new military spending records, though oil and gas revenues are expected to decline.
by Horsepankake
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Summary:
Russia’s draft budget for 2025-2027, revealing a substantial increase in military spending. Despite previous promises, military expenditure will rise by 24%, hitting a record 13.2 trillion rubles (6.2% of GDP) in 2025. This reflects Russia’s commitment to sustaining the war effort in Ukraine and prioritizing defense over social programs like education and healthcare, which will see smaller increases or real-terms cuts. The budget also includes significant classified spending tied to defense, while non-oil revenues are projected to grow due to inflation and tax hikes, though oil and gas revenues are expected to decline. Public discussion of the military budget remains minimal due to growing war fatigue among Russians.
Additionally, Gazprom’s financial troubles are highlighted, as the loss of the European gas market has caused a significant drop in profitability. Gazprom is now seeking government support to mitigate these losses, and its future outlook is bleak with exports expected to remain far below pre-war levels for years.
The report warns that Russia’s economic reliance on military spending could result in long-term instability, inflation, and higher interest rates, with potential risks for state employees’ salaries and infrastructure projects.