Russia Delays Civilian Spending as Soaring War Costs Widen Budget Deficit

The Russian Finance Ministry was forced to delay a portion of scheduled government expenditures to later periods to maintain its "everything for the front" priority and keep the budget balanced.

Finance Minister Anton Siluanov announced these measures during the Moscow Financial Forum, as reported by The Moscow Times on September 21.

"The most important thing for us right now is defense tasks, the tasks of the front," the minister stated, adding that resolving budget challenges this year required "digging around somewhere" and adjusting both expenditures and the resource base.

From January through August, the federal budget deficit expanded to 5.8 trillion rubles ($72.5 billion), representing 2.5% of GDP. Siluanov noted that this deficit will continue to grow, explaining: "During the execution of the budget, additional needs for financing and expenditures arose.

Additional sources of funding for these costs will also be provided for this purpose. We expect the deficit to be larger than planned, but it will remain within 3% of GDP." He added that the government intends to cover the shortfall using accumulated account balances and borrowing on the debt market, according to The Moscow Times.

In the 2026 budget law, the Russian government originally allocated 12.9 trillion rubles ($161.25 billion) under the "national defense" item.

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However, actual spending related to Russia’s full-scale invasion of Ukraine, including adjacent budget categories, reached 10.687 trillion rubles ($133.58 billion) in the first half of the year alone, according to calculations by Janis Kluge from the German Institute for International and Security Affairs, The Moscow Times reports.

Compared to the same period last year, military and arms production expenditures grew by another 30%. They rose by 65% compared to January–June 2024, and have increased more than fivefold compared to pre-war 2021. Cumulative spending on the military since the beginning of 2022 has exceeded 57 trillion rubles ($712.5 billion).

This stagnation aligns with a previous report, which warned that severe labor shortages and intense military spending have pushed Russia to its absolute productive limits.

It notes that the Kremlin is rapidly exhausting its current human and financial resources, leaving Putin with a fundamental choice: either scale back his military ambitions in Ukraine or implement deeply unpopular domestic measures, such as forced conscription and a Soviet-style command economy, to sustain the invasion.

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