Russia expects to exceed its Ukraine war budget by at least $28 billion this year as its military advances slow and Kyiv gains momentum with cross-border strikes. A letter from Finance Minister Anton Siluanov in February urged the cabinet to freeze approximately 2.9 trillion roubles ($40.8 billion) in planned non-war-related spending for the year, warning that the 2 trillion rouble ($28.2 billion) overspend could escalate to as much as 4 trillion roubles ($56.4 billion) in a negative scenario, according to the Financial Times.
Growing Budget Deficit
Siluanov also projected that Russia would overspend on the war by an additional 4 trillion roubles in both 2027 and 2028. With 16.84 trillion roubles ($238 billion) allocated for defence and security—roughly two-fifths of this year's budget—Moscow initially anticipated a budget deficit of 3.8 trillion roubles ($51 billion). However, that figure had already ballooned to 5.9 trillion roubles ($79.12 billion) by April, which would be Russia's largest deficit since the full-scale invasion began in 2022.
Despite these pressures, Russia climbed from the world's 11th largest economy at the war's outset to ninth last year, buoyed by expansions in defence, industry, and procurement, even amid sanctions and war costs. Inflated oil prices linked to the Iran war have helped keep Russia afloat since Siluanov's February warning, but the war economy is showing signs of strain as public services and manpower deplete.
Putin's Outlook and Economic Adjustments
Sources close to President Vladimir Putin indicate he still believes his forces can capture all of Donetsk and Luhansk by autumn, but the dire financial situation highlights the difficulties Russia faces after more than four years of bitter conflict with an emboldened Ukraine. Putin told government officials earlier this month that measures to boost the economy were starting to yield results after Moscow was forced to slash its economic growth forecast for this year. He noted that March economic data was positive, with GDP up 1.8 per cent.
Siluanov told Russian newspaper Kommersant on Wednesday that the finance ministry was revising the budget to account for changes in macroeconomic conditions and the need to concentrate additional resources on important priority areas. He stated, “Of course, there are absolute priority spending items: fulfilling social obligations and ensuring the country's defense and security. Otherwise, we analyse each item for economic return, achievement of results, and, ultimately, its impact on people's well-being.” Siluanov suggested further cuts could still be on the cards, warning that reserves are not infinite and that no financial slack can be afforded amid large-scale global transformations.
Economic Forecasts and Military Stalemate
Forecasts by Russia's economy ministry earlier in May lowered estimates for GDP growth in 2026 to 0.4 per cent from 1.3 per cent, and cut estimated growth in 2027 to 1.4 per cent from 2.8 per cent. Growth was expected to reach 2.4 per cent in 2029. Meanwhile, Russia's rate of advance in Ukraine has significantly slowed in 2026 compared to last year. The Institute for the Study of War, an American advocacy think-tank, assesses that Russian forces seized 104 square kilometres in Ukraine between the start of the year and 26 May, compared to 1,619 square kilometres taken in the same period in 2025.
