Russia’s latest federal budget proposal, unveiled on September 29, 2025, has drawn international attention for its sharp focus on defense and security spending, as well as the political and economic signals it sends amid the ongoing war in Ukraine. The proposal, submitted to the State Duma for 2026–2028, marks another significant increase in military allocations, with nearly 40% of total state spending earmarked for the armed forces, police, and security services, according to The Moscow Times and Newsweek.
For 2026, the Russian government plans to allocate $129.3 billion (12.93 trillion rubles) to the "National Defense" section of the budget, an increase of $3.25 billion (325 billion rubles) over previous projections from the Finance Ministry. This adjustment pushes total expenditures for the military, police, and security services to $168.4 billion (16.84 trillion rubles), or 38% of all planned federal spending for the year. The updated figures are not just numbers on paper—they reflect the Kremlin’s priorities as the war in Ukraine grinds on and diplomatic efforts for peace remain stalled.
As is customary, the majority of Russia’s defense spending remains shrouded in secrecy. The budget proposal’s annexes reveal that $108.5 billion (10.85 trillion rubles), or 84% of the "National Defense" section, is classified and hidden from public scrutiny. In total, $127.1 billion (12.71 trillion rubles)—28.8% of the entire federal budget for 2026—will go to classified items. By comparison, $130.8 billion (13.08 trillion rubles), or 31.5% of total spending, was classified in 2025. The trend underscores the Kremlin’s desire to keep the true scale and nature of its military operations opaque, a move that has drawn criticism from both domestic and international observers.
Experts have been quick to interpret these numbers in the context of Russia’s ongoing war in Ukraine. Alexander Kokcharov, a geoeconomics analyst for Russia, Eastern Europe, and Central Asia at Bloomberg Economics, told Newsweek that the high share of the budget devoted to defense and security indicates that Moscow is not preparing for peace, but rather for "more fighting on the battlefield in Ukraine." Kokcharov’s assessment is echoed by other analysts, who point out that the continued diversion of resources to fund the war effort suggests the Kremlin has little intention of de-escalating its military campaign or engaging in meaningful peace negotiations.
Since launching its full-scale invasion of Ukraine in 2022, Russia has steadily ramped up military spending to record levels, pouring money into missiles, drones, and personnel to sustain its war machine. This comes at a time when the Russian economy is under considerable strain from international sanctions. The Finance Ministry has responded by proposing a hike in the value-added tax (VAT) from 20% to 22% starting in 2026, a move explicitly designed to help fund the military and police while attempting to curb the budget deficit. The VAT increase is one of the key changes in the three-year budget approved by the Russian government in late September 2025.
The proposal is not without domestic controversy. High military spending, combined with the proposed VAT hike, is expected to put additional pressure on ordinary Russians already grappling with high inflation. The Institute of National Economic Forecasting of the Russian Academy of Sciences reported earlier in September that the country’s GDP growth is stagnating—a worrisome sign for a nation committing such a large share of its resources to defense and security. The political risk for the Kremlin is clear: as Russians feel the pinch of higher taxes and rising prices, public support for the war and for President Vladimir Putin’s government could erode.
Internationally, the draft budget has raised eyebrows for its implications beyond Russia’s borders. Reuters reported that the defense spending target for 2026—13 trillion rubles ($157 billion)—is higher than the 12.6 trillion rubles noted in earlier Finance Ministry documents, though it falls short of the post-Soviet high of 13.5 trillion rubles set in 2025. The draft also projects that defense spending will rise to 13.6 trillion rubles ($164 billion) in 2027 before dipping slightly to 13 trillion rubles ($156.5 billion) in 2028, according to the Institute for the Study of War. Such figures, while staggering, may not even tell the full story; with 84% of the defense budget classified, actual military expenditures could be even higher, with some spending hidden in other budget lines.
One notable detail in the public budget materials is the allocation of an additional 30 billion rubles in capital for PSB, a bank serving Russia’s military-industrial complex. This move is widely seen as an effort to further bolster the country’s capacity to finance and sustain its war effort, even as Western sanctions attempt to squeeze Russia’s access to global financial markets.
Meanwhile, Ukraine has also been forced to dramatically increase its own military spending. In 2025, Kyiv allocated $54 billion to defense—an eye-watering 60% of its national budget—though it relies heavily on Western military and financial aid to maintain that level of expenditure. The arms race on both sides underscores the entrenched nature of the conflict and the enormous economic toll it is exacting on both nations.
The next steps for Russia’s budget are procedural but significant. The draft proposal and the VAT increase are scheduled to be reviewed by the State Duma, Russia’s lower house of parliament, on October 22, 2025. While the Duma is widely expected to approve the government’s plans, the debate is likely to highlight the competing pressures facing Russian policymakers: the need to sustain the war effort, the imperative to manage public finances, and the growing discontent among ordinary citizens bearing the brunt of economic hardship.
In the end, the numbers in Russia’s latest budget proposal serve as more than just an accounting exercise—they are a window into the Kremlin’s strategic thinking and a barometer of its willingness to continue the war in Ukraine regardless of the costs. As Kokcharov put it plainly to Newsweek: "High military spending suggests that Russia is not preparing for peace, but rather is preparing for more fighting on the battlefield in Ukraine." The world, and especially Ukraine, will be watching closely as Russia doubles down on its military priorities, even as the economic and political challenges mount at home.
