MOSCOW: Russia is hiking its national defense budget by a quarter in 2025 to 6.3% of gross domestic product (GDP), the highest levels since the Cold War, according to draft budget documents released on Monday.
This defense budget will reach 13.5 trillion roubles ($145 billion), up from the previous year, as the country continues what it terms a “special military operation” in Ukraine.
Defense expenditures will represent 32% of the total budget for 2025, which amounts to 41.5 trillion roubles ($446 billion). This shift comes after last year’s draft, which proposed a 21% cut to defense spending in 2025, highlighting a significant policy reversal.
The Russian Ministry of Finance stated that funds will be allocated to equip the armed forces with necessary weapons, ensure military personnel are paid, and support defense industries. Approximately 10% of total defense spending will be designated for personnel salaries, which have reached a post-Soviet high, with new front-line recruits earning a minimum annual wage of 3.25 million roubles ($34,945).
Russia to Allocate $38 Billion for National Security
In addition to defense spending, Russia will allocate 3.5 trillion roubles ($38 billion) for national security, which encompasses military and security agency funding. Combined, defense and security expenditures will total 17 trillion roubles ($183 billion), nearly 41% of the total budget and about 8% of GDP.
This military spending is reminiscent of the late Soviet era, when the USSR was engaged in the Afghanistan conflict while maintaining a large nuclear arsenal. Notably, defense spending will surpass the allocations for social services, which are projected at 6.5 trillion roubles ($70 billion) for pensions, social compensations, and subsidies.
Education and healthcare will see significantly lower allocations, with 1.58 trillion roubles ($17 billion) (0.7% of GDP) for education and 1.86 trillion roubles ($20 billion) (0.87% of GDP) for healthcare in 2025.
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The government has adjusted its budget deficit projections, raising the 2024 deficit estimate to 1.7% of GDP, up from earlier forecasts of 1.1% and 0.9%. The 2025 budget deficit is expected to be 0.5% of GDP.
Russian oil and gas revenues are anticipated to decline from 2025 to 2027 due to lower commodity prices and tax adjustments, as the country’s largest gas producer, Gazprom, is set to see a reduced tax burden.
Finance Minister Anton Siluanov said that oil and gas revenues are projected to account for 27% of total budget revenues, marking a shift away from reliance on these sectors.
