Russia Releases Proposed Military Budget for 2025

Executive Summary:

• Moscow released the draft proposal for Russia’s federal budget for 2025 and 2026–2027, which shows that the national defense budget will increase significantly from previous years, especially in comparison to the period before its war against Ukraine.
• For 2023 and 2024, Russia’s military expenditures have not been clear, and data released shows that for both years, what Moscow actually spent was significantly higher than the previously planned budget.
• These increases mean Russia’s government must implement ever more expansionary monetary and fiscal policies  to avoid an economic contraction in real terms. The primary purpose of the Kremlin’s planned budgeting today is to prevent a real decrease in Russia’s GDP for as long as possible. 

The draft proposal of Russia’s federal budget for 2025 and 2026–2027 was submitted to the State Duma on September 30. According to the document, the national defense budget for 2025 would be 13.5 trillion rubles (almost $140 billion). There will additionally be a minor decrease in military spending of 12.8 trillion rubles ($128 billion) in 2026 and 13.1 trillion rubles ($126.6 billion) in 2027 (Sozd.duma.gov.ru, September 30). This is an evident administrative victory of the coalition consisting of the Ministry of Defense (MoD) and the military-industrial complex. Regardless of whether or not the war against Ukraine will end or cease in the foreseeable future, the military budget will not return to the pre-war level of only 3.6 trillion rubles ($48.5 billion), nor the levels from 2022–2023 of 5.5 trillion rubles ($80.3 billion) and 6.4 trillion rubles ($75.2 billion) respectively. Russia’s dramatic increase in military spending indicates that it anticipates the war lasting beyond the next year and perhaps represents preparations to expand its military operations beyond Ukraine.

This victory increases the imbalances in Russia’s domestic economy. Consequently, the authoritarian regime promises to become tougher and more self-isolated, meaning taxpayers will inevitably suffer an additional fiscal and inflationary burden. The remaining profitable assets will be reallocated in favor of Russia’s most loyal groups, families, and people. This will likely lead to discontent among regular Russians, who are already becoming fatigued from the long war (see EDM, November 27, 2023, August 14, September 4). 

Turbulent Budgetary Planning

Since 2023, Russia’s military expenditures have not been entirely transparent. For example, Russia reported in October of last year that there were 6.4 trillion rubles ($75.2 billion) of military expenditures in the first three quarters of 2023, a number that would have increased by the end of last year. This is a significant jump from the federal budget passed in December 2022, which initially assigned only about 5 trillion rubles ($73.2 billion) to defense in 2023 (see EDM, October 5, 31, 2023).

The 2024 military spending has become even less clear. There were 10.4 trillion rubles ($115.2 billion) authorized in December 2023 for 2024 (see EDM, December 7, 2023). However, in September 2024, the total federal expenditures assigned for 2024 were reviewed and increased from almost 36.7 trillion rubles ($407 billion) to more than 40.7 trillion rubles ($451.4 billion), and there is no official explanation for what the additional 4 trillion rubles were to be used for (Minfin.gov.ru, January 1; Sozd.duma.gov.ru, September 30).

The share of total spending on defense, security, and law enforcement was declared 8.7 percent of Russia’s gross domestic product (GDP) in May 2024. Therefore, the military budget for 2024, taken separately from security and law enforcement, could hardly be less than 12.2 trillion rubles ($135.2 billion) after the revisions, and maybe even closer to the number currently planned for 2025. Simply speaking, the military budget for 2024 was probably increased by at least 2 trillion rubles compared to the original plan (TASS, May 15).

A summary of Russia’s planning of military budget and known spending in times of war is represented below (Minfin.gov.ru, December 8, 2021;, November 2022, December 31, 2022, January 1; Sozd.duma.gov.ru, September 30):

Table 1: Planned Military Expenditures (National Defense Budget), 2022–2027 

Table 2: Russia’s Actual Military Expenditures, 2022–2024

These numbers demonstrate that the Kremlin cannot accurately plan the military budget during wartime. However, if the Russian government believed during the budgetary planning of 2022 and 2023 that the next planning period, 2023 and 2024, would be the last year of the war, it would likely have cut the military budget, as peacetime would presumably demand fewer resources than what the combat situation today requires. Given how the war in Ukraine is going, Russia’s MoD and the military-industrial complex will likely receive a blank check for any requests they have regarding spending and costs.

The Ghost of Inflation

The inflation and devaluation of the ruble also play a significant role in these calculations. The planned military budget for 2025 predetermines further inflation and devaluation. For example, Russia’s government estimates 2024’s GDP as 195.8 trillion rubles (almost $2.2 trillion) even though 2023’s GDP was 172.1 trillion rubles ($2 trillion), and the original assessment for 2024 was about 180 trillion rubles (also $2 trillion). The GDP for 2025 is anticipated to be 214.6 trillion rubles ($2.2 trillion) (Rosstat.gov.ru, April 5; Sozd.duma.gov.ru, September 30).

All these numbers mean that Russia’s government must run faster—meaning expansionary monetary and fiscal policies, resulting in more rubles, more inflation, and further devaluation—just to stay in place and maintain the same real GDP. Even if the government hopes that the military budget will continue to grow (in rubles and US dollars), its primary purpose today is to prevent an economic contraction in real terms for as long as possible. The increased number of personnel in the armed forces and at least decade-long restoration of the Russian conventional arms stockpiles are aimed to guarantee that military expenditures will not be lower than $100 billion a year any time soon (RBC, May 17, August 27; see EDM, July 25, September 19).