On September 29, the Russian government submitted its draft budget for 2026–2028 to the State Duma. Formally, war spending in 2026 will be only 0.2 trillion rubles lower than this year, or about 1.5%, a change close to statistical noise. By 2027–2028, spending on the military-industrial complex is expected to exceed the 2025 level, whereas before the war Russia spent about 3–3.5 trillion rubles a year on defense.
Over the three-year period, the authorities plan to direct nearly 40% of federal funds to defense and security. Under the “National Defense” line alone, planned spending for the next three years is 1 trillion rubles higher than during the first four years of the war. An economist at an international bank told the publication that this “war budget” is meant to signal to foreign audiences that the Kremlin’s current priorities remain unchanged despite budget pressure.
For 2026, the draft sets spending at 44.1 trillion rubles and revenue at 40.3 trillion, leaving a projected deficit of 3.8 trillion rubles after an expected 5.7 trillion in 2025. Domestic borrowing remains the main way to cover the gap: the Finance Ministry has already raised its 2026 borrowing target to 4 trillion rubles. At the same time, while average annual military spending in 2025–2028 is set to be nearly four times higher than in the last prewar year, social spending is growing far more slowly.
The article says the earlier growth impulse driven by heavy injections into the defense sector began fading about a year ago. In 2025, localized crises affected construction, transport, metallurgy, agriculture, and coal mining. Oil and gas revenues fell by 20% year on year over the first eight months, and, according to the Center for Macroeconomic Analysis and Short-Term Forecasting, civilian sectors in August were down 5.4% compared with December 2024.
“Only those people who are directly involved in military production are seeing their lives improve,” Elina Ribakova, a senior fellow at the Peterson Institute for International Economics, told the outlet.
Among the reasons for mounting stagnation, the economists interviewed cite sanctions, inflation, high interest rates, labor shortages, and a heavier tax burden. Economist Dmitry Polevoy estimates the central bank’s key rate could stand at 15–16% in 2025 and 11–12% in 2026. Ribakova argues that raising VAT to 22% would further slow the economy and add to price growth, while the Economy Ministry’s new forecast already points to real household income growth in 2026 slowing by nearly half to 2.1%.
Even if the Kremlin decided to abandon its current course, economists say cutting military spending quickly would be extremely difficult. Ribakova compares the current imbalance to a bubble that pulls money and labor into the defense sector while weakening civilian industries. The head of a Russian economic research center told the publication that a sharp reduction in defense funding would likely trigger not a mild recession but a full downturn, with unemployment, falling wages, lower tax revenues, and another wave of inflation. In their view, such an exit would be easier only if accompanied by a normalization of foreign policy and softer sanctions, but for now, they say, beneficiaries of wartime spending still share a consensus in favor of keeping the current line.