Russia Cuts National Technology Projects by Over 37% as War Spending Dominates Federal Budget

Eight major national projects intended to secure "technological leadership" and "sovereignty" for Russia faced severe spending cutbacks in 2025 as federal budget shortfalls and military demands escalated.

The initiatives received only 201.9 billion rubles ($2.46 billion) out of the planned 324.4 billion rubles ($3.95 billion), marking an overall reduction of 37.8%, as reported by The Moscow Times on July 24.

The most significant cut fell on space technology research, which was allocated 10 billion rubles ($122 million) in the budget plan but received no funding.

Meanwhile, funding for the national project focused on machine tools and robotics—aimed at placing Russia among the top 25 most automated nations—was reduced by more than four times, dropping from 52.2 billion rubles ($636.5 million) to 11.8 billion rubles ($143.9 million). Allocations for new materials and chemistry were cut by nearly 40%, receiving 5.7 billion rubles ($69.5 million) instead of the targeted 9.4 billion rubles ($114.6 million).

Industrial and transport mobility programs experienced a similar 40% reduction, down to 102.2 billion rubles ($1.25 billion) from an initial 167.2 billion rubles ($2.04 billion). Other sectors also experienced spending reductions. Health research and medical equipment development funding fell 15.1%, from 5.7 billion rubles ($69.5 million) to 4.8 billion rubles ($58.5 million).

Food security funding dropped 6.8%, from 14.6 billion rubles ($178 million) to 13.6 billion rubles ($165.8 million), while nuclear and energy technology programs were reduced by 5.1%, from 30.1 billion rubles ($367 million) to 28.6 billion rubles ($348.7 million). The drone development sector was the sole exception, receiving 35.7 billion rubles ($435.3 million), exceeding its planned allocation of 32.7 billion rubles ($398.7 million).

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The funding cuts stemmed from project unreadiness and lower-than-expected budget revenue. Despite tax adjustments, including increases in corporate profit taxes, progressive income rates, and recycling fees, total revenues fell 3 trillion rubles ($36.6 billion) short of target, leading to a 5.6 trillion rubles ($68.3 billion) deficit.

During this period, "a high level of spending on financing defense areas was preserved," amounting to 13.5 trillion rubles ($164.6 billion). Fiscal challenges "intensified" into the following year.

High-ranking officials in the Russian government warned Vladimir Putin that the country’s spending on Russia’s full-scale invasion of Ukraine was reaching an unsustainable level.

Sources familiar with the matter and internal documents revealed that representatives from the Ministry of Finance and the Central Bank alerted the Kremlin that current defense spending risked triggering a dangerous increase in the state budget deficit, which rose to 5.9 trillion rubles ($82 billion) in the first four months of the year.

Concerned officials proposed cuts to defense spending to stabilize public finances, but the Ministry of Defense resisted the measures and demanded an additional three trillion rubles (~$41.7 billion) in funding.

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