Under the 2025 financial plan, which was approved by the Russian Federal Government earlier this week, military spending will increase to 13.2 trillion rubles (over $140 billion) from this year’s 10.4 trillion rubles.
The $142 billion means Russia will spend a record 6.2% of GDP next year on defense. The Central Bank of Russia has predicted the total economy will grow by 1.4% next year.
While the Kremlin foresees a drop in military spending to 5.6% and 5.1% of GDP in 2026 and 2027, respectively, the budget allocations for those years are still significant.
Analysts suggest that Moscow will have to spend big to replace the military equipment destroyed in Ukraine.
According to Kommersant, a Russian daily newspaper, Russian Prime Minister Mikhail Mishustin said it was difficult to put a budget together because world trade was diminishing, global GDP growth was slowing, and sanctions and restrictions from “unfriendly nations” were spreading.
In the circumstances, however, he considered the budget as “optimal.”
Higher corporate profit taxes and a progressive income tax system for higher earners are some of the ways the government plans to fund the additional expenditure.
To put Russian military spending in perspective, the U.S. plans to spend $850 billion in 2025, nearly six times as much as Russia. That amount represents just over 3% of the considerably higher U.S. GDP.
