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Russia raises 2027 military spending 27% to highest level of the Ukraine war

Russia raises 2027 military spending 27% to highest level of the Ukraine war

Money Moves

Record war budget reaches the State Duma as Russia's 2026 deficit forecast more than doubles

September 30th, 2026: Government submits 2027-29 budget to State Duma

Overview

Updated Oct 1

Russia plans to spend 17.1 trillion roubles ($202.6 billion) on defense in 2027, a 27% jump over its original plan and the highest figure since the invasion of Ukraine began in 2022. The government sent the 2027-29 draft budget to the State Duma on Sept. 30, with the first of three readings set for Oct. 29.

The 2026 deficit is now a record 7.3 trillion roubles ($88 billion), more than double the earlier forecast. Defense and security take 44% of federal spending in 2027. Welfare and education budgets shrink as the government funds the gap with more borrowing and new taxes on passive income and foreign purchases.

Why it matters

Russia's war is now funded by record borrowing and new taxes, pushing a growing fiscal bill onto citizens and the economy for years to come.

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Key Indicators

$88B
2026 budget deficit forecast
A record 7.345 trillion roubles, more than double the earlier $45 billion estimate.
44%
Defense and security share of 2027 spending
Combined military, interior, and security outlays, per Carnegie Russia Eurasia Center fellow Alexandra Prokopenko.
34.9%
Share of 2027 budget kept classified
The largest classified share on record, per Vyorstka; only 2.3 trillion roubles of defense costs are itemized in public documents.

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People Involved

Anton Siluanov
Anton Siluanov
Finance Minister of Russia
Overseeing the 2027-29 draft budget, now before the State Duma
 Vladimir Putin
Vladimir Putin
President of Russia
Signed decree expanding the armed forces on Sept. 28

Organizations Involved

Russian Finance Ministry
Russian Finance Ministry
Federal agency
2027-29 draft approved by cabinet Sept. 24; submitted to State Duma Sept. 30

Controls Russia's federal budget, tax policy, and state borrowing.
United Russia
United Russia
Political party
Holding parliament after Sept. 21 elections

Russia's ruling party, which controls the State Duma.

Timeline

February 2022 September 2026

7 events Latest: September 30th, 2026 · 1 month ago
Tap a bar to jump to that date

  1. Government submits 2027-29 budget to State Duma

    Latest Procedural

    The draft budget was delivered to parliament on Sept. 30. Budget Committee chairman Andrei Makarov said the first of three readings is set for Oct. 29.

  2. Defense budget documents show 27% increase

    Budget

    Reuters reports 2027 defense spending of 17.1 trillion roubles, the war's highest figure.

  3. Putin expands armed forces

    Policy

    Decree raises military headcount by 15,500 to 2,441,630 personnel.

  4. Finance Ministry submits 2027-29 draft budget

    Policy

    Draft introduces new taxes on passive income, online shopping, and mining profits.

  5. Cabinet approves 2027-29 budget package

    Policy

    The government approved the Finance Ministry's draft the same day it was submitted. The package projects a 5.5 trillion rouble deficit for 2027, about 2.2% of GDP.

  6. United Russia wins parliamentary elections

    Election

    Ruling party keeps its majority; observers call the vote rigged.

  7. Russia invades Ukraine

    Conflict

    Full-scale invasion begins a war that reshapes the federal budget.

Scenarios

1

Russia revises 2027 defense spending higher by spring

Possible Resolves by Q2 2027

Discussed by: CEPA analysts and previous budget cycles

The Kremlin revised its budgets upward in spring 2025 and 2026. If the war escalates in coming months, as current mobilization signals suggest, the 2027 targets could rise again before the fiscal year closes. This path keeps pushing the defense ceiling higher.

2

Deficit forces another round of tax increases

Likely Resolves by End of 2027

Discussed by: Euronews and Moscow Times analysis of Finance Ministry proposals

The 2027 draft already raises taxes on passive income, foreign e-commerce, and mining windfalls. With the deficit at 3.2% of GDP and debt climbing past the 20% mark the government calls safe, a second tax package becomes likely if revenue misses targets or the war drags on.

3

War de-escalation trims actual military outlays

Unlikely Resolves by Mar 1, 2028

Discussed by: Analyst consensus treats this as unlikely in the near term

If ceasefire negotiations advanced or sanctions bit hard, actual defense spending could undershoot the 17.1 trillion roubles budgeted. Treasury reports showing real outlays below plan would signal a move away from the wartime footing.

4

Stalling economy forces a mid-year budget squeeze

Possible Resolves by End of 2027

Discussed by: bne IntelliNews

IntelliNews reported the 2027 budget plan as the economy stalls, with the deficit reaching 5.5 trillion roubles. Slower growth cuts tax revenue and could push the government toward another round of tax hikes or spending cuts before 2027 is out.

Historical Context

2 moments from history that rhyme with this story — and how they unfolded.

December 1979 – February 1989

Soviet-Afghan War (1979-1989)

The Soviet Union invaded Afghanistan in December 1979 and fought a decade-long counterinsurgency. The war drained the Soviet budget, strained an economy already slowing under the arms race, and ended with a full withdrawal in 1989.

Then

Soviet forces pulled out in 1989 leaving a collapsed Afghan state.

Now

The war's economic burden accelerated Soviet fiscal decline in the years before the union collapsed.

Why this matters now

Mirrors Russia's situation in Ukraine: prolonged war spending against sanctions, funded on borrowed time.

August 1998

Russian financial crisis (1998)

In August 1998, Russia defaulted on its domestic debt and devalued the ruble after falling oil prices and fiscal strain drained reserves. The government had borrowed heavily to cover budget shortfalls while tax collection collapsed.

Then

Ruble devaluation, bank failures, wage arrears, and a sharp recession.

Now

Russia rebuilt fiscal discipline in the 2000s on the back of high oil prices.

Why this matters now

Shows how heavy borrowing to cover budget gaps can become a sovereign crisis when commodity revenue falls.

Sources

(18)
+12
Reuters Defense News Kyiv Independent CEPA Euronews The Moscow Times The Deep Dive Informat.ro NFSI Investing.com bne IntelliNews TASS NewsCord Kyiv Post Meduza Euromaidan Press The Moscow Times TASS