Russia plans record $203 billion defense budget for 2027 as deficit grows

The planned defense spending would be about 27% higher than the 13.5 trillion rubles originally budgeted for 2027 and the highest annual figure since Russia launched its full-scale invasion of Ukraine in 2022.

Russia plans to spend a total of about 50 trillion rubles ($591 billion) on defense over the next three years, the documents show.

For 2026, the government had budgeted 12.1 trillion rubles for defense, although the actual amount is classified and will not be disclosed. Reuters noted that some military spending may also be included in other parts of the federal budget.

The increase comes as pressure on Russia's public finances grows. The government has doubled its forecast for the 2026 budget deficit to 3.2% of GDP from an earlier estimate of 1.6%.

Total budget spending in 2026 is now expected to rise by 13.2% to 48.6 trillion rubles, equivalent to 20.9% of GDP.

At the same time, the government cut its forecast for oil and gas revenues this year to 7.6 trillion rubles from 8.9 trillion rubles.

Russia also plans to increase net borrowing by 26% to 5 trillion rubles in 2026 and use 459 billion rubles, about 11% of the liquid portion of its National Wealth Fund, to help cover the deficit.

Borrowing is expected to rise further in 2027, increasing by 43% to 7.7 trillion rubles. State debt is projected to reach 21.7% of GDP, up from 19.9% in 2026 and above the 20% level Russian authorities regard as safe.

The government has also announced plans for new tax increases in 2027. A proposed windfall tax on metals and mining companies is expected to raise around 200 billion rubles annually, according to the documents.

The Russian government is expected to submit its draft budget to parliament by Oct. 1.