On July 27, Vladimir Putin addressed the deputies of the State Duma of the VIII convocation, outlining the key directions of the country's economic policy. The main thesis of the speech was the confirmation of the priority of military spending in the formation of the budget for 2026–2029. Despite a shortage of funds, the Kremlin insists that strengthening defense remains the main task.

Actual Spending vs. Plans

The government's initial plans for the "national defense" line item in the 2026 budget were 12.9 trillion rubles. However, actual spending has already exceeded these figures by 4–5 trillion rubles. According to Janis Kluge, a researcher at the German Institute for International and Security Affairs, actual spending on the war in the first quarter of this year reached 5.9 trillion rubles.

The dynamics of the growth in military spending look impressive:

  • Compared to the same period last year, spending increased by 29.9%.
  • Compared to the first quarter of 2024 — by 68.7%.
  • Over the year (since 2023), the growth amounted to 129%.
  • If compared to the start of the conflict in the first quarter of 2022, spending increased 4.6 times.

The Cost of War for the Economy

The total cost of the war with Ukraine for Russian taxpayers has already reached 53.079 trillion rubles (about $746.6 billion). Experts note that this sum is equivalent to 28 years of current healthcare spending or 30 years of education funding. Emil Ablayev, a leading expert at the Center for Macroeconomic Analysis and Forecasting, emphasizes that the priority of defense forces the authorities to "selectively approach" the financing of other sectors.

Deficit and Tax Measures

Against the backdrop of rising military spending, the budget situation is worsening. Last year, receipts into the treasury were 3 trillion rubles lower than planned. The Ministry of Finance attempted to compensate for the difference by raising VAT to 22%, however, the deficit by the end of the first half of the year already amounted to almost 6 trillion rubles. Experts predict that by the end of the year, this gap could reach 7 trillion rubles.

Increase in Army Strength

Alongside the budget revision, the Armed Forces are being scaled up. From August 1, the authorized strength of the Russian army will increase by 27,000 servicemen. Andrey Kartapolov, Chairman of the State Duma Defense Committee, stated that declaring a mobilization is not required, as Russia has "enough volunteers" to conduct hostilities.

In his speech, Putin also accused the West of launching a "Russophobic machine" and setting "world records" for sanctions. He assured that the institutions of power are ready to give a "decisive rebuff" to any hostile steps, and that the people of Russia cannot be broken.