Military Spending in Russia’s Draft Federal Budget for 2027–2029

On 30 September, Russia’s Ministry of Finance submitted the country’s draft three-year budget for 2027–2029 to the State Duma, the lower house of the Federal Assembly of Russia, for consideration and approval.

Like other legislative bills, the draft budget must pass through three readings in the Duma. At the first reading, held on 28 October, the main budget parameters—especially the government’s total revenues and expenditures for each year—are due to be approved.

At the second reading, which is likely to take place in mid-November, the Duma will consider proposed amendments. Some of these amendments are expected to pass, although the total expenditure set for each year will remain unchanged.

At the final reading, held shortly thereafter, the budget will be approved as a whole and sent to the Federation Council, the upper house of Russia’s parliament, for consideration. The Council usually approves budgets without extensive debate or scrutiny. The draft will then be submitted to Russian President Vladimir Putin for signature and is likely to become law in early December.

This backgrounder examines what the draft budget reveals about Russia’s priorities and plans for military spending over the next three years.

The economic forecast underpinning the budget

The 2027–2029 draft budget is based on the Russian Ministry of Economic Development’s economic forecast (Minekon; see the note below for further details) for 2027–2029.

According to this forecast, Russia’s real gross domestic product (GDP) will grow by 0.6 per cent this year. Economic growth is projected at 1.4, 1.9 and 2.4 per cent in 2027, 2028 and 2029, respectively.

The annual average inflation rate is also expected to fall from 6.1 per cent this year to 5 per cent in 2027, and then to 4 per cent in both 2028 and 2029.

Unemployment is forecast to remain at a very low 2.3 per cent throughout this period. However, the investment rate is expected to decline by 5.4 per cent this year and register only very slight growth in 2027, before reaching 3 per cent growth in 2029.

Overall, given current conditions, this economic forecast is cautious and understandable. If realized, it could allow the central bank to gradually reduce its key interest rate, currently at 14 per cent.

Under the draft budget, Russia will continue to run a budget deficit through 2029. The deficit as a share of GDP is forecast at 3.2 per cent this year, 2.2 per cent in 2027, and 1.9 per cent in each of 2028 and 2029.

Continuing the trend of recent years, revenues from oil and gas exports will remain relatively low. These revenues are forecast to account for only 18.4 per cent of total budget revenues this year, with their share falling to less than 16 per cent by 2029.

Nevertheless, as a result of tax increases—particularly value-added tax (VAT)—and other fiscal measures, total budget revenues are expected to rise substantially.

This means that sanctions imposed to limit Russia’s oil and gas revenues will gradually have less impact on the government’s financial resources.

Military spending in the draft budget

In Russia, the term “military spending” almost always refers to expenditure recorded under the “National Defence” budget chapter.

However, some expenditures included in the Stockholm International Peace Research Institute’s (SIPRI) standard definition of military expenditure are recorded in other budget chapters, particularly “Social Policy” and “National Security and Law and Order.”

The table below shows Russia’s total planned military expenditure for 2027–2029, based on the figures in the draft budget, alongside the military expenditure forecast in the 2026 budget law.

The evidence and information available so far indicate that Russia’s total military expenditure in 2026 will be considerably higher than the amount forecast in the budget law and could reach approximately 17 trillion rubles. In that case, the military expenditure forecast for 2027 may be lower in real terms (after taking inflation into account) than military spending in the current year.

One point to note is the change in the funding source for compensation paid to wounded service members and the families of military personnel killed in the war against Ukraine. This change has been in effect since 2027.

In the 2026 budget, this compensation was to be funded from a classified expenditure line in the “Social Policy” chapter; however, no such line appears in the 2027 draft budget.

It is almost certain that this is the main reason for the decline in military expenditure outside the “National Defence” chapter in the 2027 budget compared with the 2026 budget.

Furthermore, the possibility that this change was also implemented during 2026 cannot be ruled out. This could partly explain the sharp increase in expenditure in the “National Defence” chapter compared with the figures in the 2026 budget law.

A final and important point is that the budget figures for 2028 and 2029 do not in any way represent definitive government priorities or decisions on future policy. They are merely projections and may change substantially when the 2028 budget is drawn up.

This brief analysis is based on Russia’s draft federal budget for 2027–2029. It should be noted that military expenditure in the final budget law may differ from the draft figures, as happened with the 2026 budget, when spending in the “National Defence” chapter in the final law was lower than the figure in the draft.

A more detailed and comprehensive report on Russian military spending is due to be published in late 2026 or early 2027, after the new budget becomes law and more information becomes available on budget execution during the current year.