The state budget for 2027 foresees a reduction in spending on social care, education and health, while at the same time a record increase in military spending is planned. According to the draft budget, Russia intends to spend 180.3 billion euros on defence, which is 27 per cent more than the initially planned 142.3 billion euros.
This is the largest amount projected for defence since the war in Ukraine began in 2022. By comparison, the budget for education will fall by 6 per cent compared to the initial plan, and that for health by 6.8 per cent, while spending on social welfare will be 7 per cent lower. Social spending includes state pensions, payments to war veterans and maternity benefits.
Spending in the category of the national economy will fall by 7.4 per cent. This category includes the construction of roads, other infrastructure projects and subsidies for agriculture and other sectors.
To finance the constant rise in military spending, the state has had to use funds from the fiscal reserve, increase borrowing and raise taxes. Russia formally adopts a three-year budget for long-term planning, but every year it has been forced to change its plans and has regularly exceeded the projected annual deficits. The federal budget, meanwhile, does not include regional and municipal budgets, from which a significant portion of social benefits is funded.
The new tax increases in the draft budget for 2027, along with a higher-than-expected rise in the cost of utilities, were announced following the parliamentary elections held this month. The announcements have caused discontent among some supporters of the Kremlin. The new State Duma is expected to approve the new budget, in which the pro-Kremlin party United Russia holds a constitutional majority.
The authorities have stated that victory in the war in Ukraine takes precedence over all other needs. The cost of debt servicing in 2027 will rise by 21.6 per cent compared to the initial plan and will reach 9.4 per cent of total spending. Projections show that by 2029 the share of debt servicing costs will rise to 10.6 per cent.
