Vladimir Putin visits the Special Technology Centre in St. Petersburg, Russia, 19 September 2024. Photo: EPA-EFE/VALERIY SHARIFULIN/SPUTNIK/KREMLIN POOL
The Russian government’s draft spending plans envisage a giant leap in the country’s military funding next year and is expected to account for over 40% of the country’s annual budget, according to proposals published by Russia’s lower house of parliament, the State Duma.
Defence spending in 2025 is expected to reach some 13.5 trillion rubles (€130 billion), the equivalent to 6.31% of Russia’s GDP, meaning that defence and security spending combined will account for 41% of budget spending next year, a 25% increase on Russia’s already sky-high military costs.
Envisaging the end of Russia’s war in Ukraine, last year’s three-year budget forecast that after a sharp increase in 2024, military spending would decline almost as sharply in 2025 and 2026, a prospect that is apparently no longer on the cards.
Russia’s introduction of a progressive income tax scale should see income tax revenue almost triple in 2025. Revenue from corporation tax is also expected to almost double next year, according to the government.
Costs for some state services, such as court fees, are due to increase sharply next year, and that tendency is only likely to continue, with revenues from fines and other penalties also projected to rise sharply.
The draft budget shows that almost 30 billion rubles (€288 million) is due to be allocated to Russia’s Central Election Committee, with elections to the Duma due in 2026.
Russian investigative journalism outlet Verstka reported on Monday that Vladimir Putin’s staff and security would cost the state almost 31 billion rubles (€298 million) in 2025, a 25.5% increase on this year, far in excess of projected inflation, which Central Bank experts have forecast at 4.8% for 2025.
Despite increased tax revenue and expenditure, the long-term outlook for the Russian economy is far gloomier than it was before the invasion, according to The Guardian, which said that Russia’s military spending had led to surging inflation while any pivot towards China and attempts to work around sanctions could not compensate for the loss of “direct access to Western markets or technology”.
