The News
Russia is set to drastically increase its military spending for 2025, according to new draft budget documents.
The Kremlin plans to increase its defense budget by 23% to $145 billion, making up 6.2% of the country’s GDP. The spending would be more than the total funding for education, healthcare, social policies, and the economy combined.
SIGNALS
Budget cements war economy status
The spending hike confirms that Moscow has now switched to a “war footing,” and that the Kremlin will make the military sector a top funding priority going forward, independent Russian outlet The Bell wrote, regardless of when the war in Ukraine ends. Earlier this month, President Vladimir Putin ordered the army to add 180,000 troops, bringing its total force to 1.5 million, which would make Russia’s military the world’s second largest after China. The budget increase can help pay for those recruits while also avoiding the need for another conscription push, Bloomberg reported.
Russian war economy is precarious, analyst says
Despite Western sanctions, Russia’s economy is growing this year, largely due to public spending. But that growth is likely to slow next year, with the sanctions having more of a long-term impact, an exiled Russian economist told Le Monde. Moscow plans to finance the new spending in part through higher taxes, so the budget on its face doesn’t seem “precarious,” Russia economy expert Alexander Kolyandr wrote in The Spectator. But the country’s new war economy is still growing beyond its means, with investment only thriving in war-related industries, he noted. “It will not collapse tomorrow, but it can’t continue to flourish for long.”