Russian President Vladimir Putin plans to spend much more on the military over the next two years than initially planned as Russia adapts the budget to the needs of a long and increasingly expensive war in Ukraine.
Bloomberg reports this with reference to the three-year financial plan.
Defense spending is expected to exceed initial budget estimates next year by more than 43%. Spending on "national defense" amounts to nearly 5 trillion rubles ($84 billion), or 3.3% of gross domestic product, and is now second only to government social programs as a share of spending. Among other changes, the budget will also allocate more money to "patriotic education," a program that includes historical exhibits, and factors in increased spending on equipping schools with state symbols.
Expenditures on education and culture will practically not increase until 2023. Spending on environmental protection will be about a quarter less than initially budgeted at the level of 0.2% of GDP.
According to the latest forecasts, the budget deficit will increase next year to 2% of GDP from 0.9% in 2022. The government will finance the deficit mainly through debt and reserves. The plan also involves borrowing up to $1 billion yearly in foreign currency.
According to the Stockholm International Institute for the Study of World Problems (SIPRI) estimates, the expenditure item "national defense" in Russiaʼs budget accounts for about three-quarters of its total military expenditure. It takes into account the financing of operational costs, as well as the purchase of weapons.
- In Russia, the direct losses of the financial sector from sanctions were calculated: $300 billion of central bank reserves were frozen, and the capital of the banking system fell by 10%.
- Earlier, Bloomberg wrote that in August 2022, Russiaʼs energy revenues fell to the lowest level in 14 months. And in the internal report of the Russian government, with which the publication got acquainted, a deep recession is predicted due to Western sanctions. There, they fear a severe decline in some sectors of the economy and a mass "brain drain" from the country.