The news
Russia will dramatically increase its military spending by 2025, according to new draft budget documents.
The Kremlin plans to increase its defense budget by 23% to $145 billion, accounting for 6.2% of the country’s GDP. The expenditure would exceed the total funding for education, health care, social policy and the economy combined.
SIGNALS
Budget reinforces war economy status
The spending increase confirms that Moscow has now moved to a “war foot”, and that the Kremlin will make the military sector a top funding priority in the future, wrote the independent Russian medium The Bell, regardless of when the war in Ukraine ends. Earlier this month, President Vladimir Putin ordered the military to add 180,000 troops, bringing the total army to 1.5 million. the world’s second largest after China. The budget increase can help pay for these recruits while also avoiding the need for a new draft, Bloomberg reported.
Russia’s war economy is precarious, analysts say
Despite Western sanctions, Russia’s economy is growing this year, largely thanks to government spending. But that growth is likely to slow next year as sanctions become more severe long term impactan exiled Russian economist told Le Monde. Moscow plans to finance the new spending in part through higher taxes, so the budget does not seem “precarious” at first glance, Russian economics expert Alexander Kolyandr wrote in The Spectator. But the country’s new war economy is still growing beyond its means, with investment flourishing only in war-related industries, he noted. “It will not collapse tomorrowbut it cannot long continue to bloom.”
