Senior officials at the Ministry of Finance and the Central Bank of Russia have warned Vladimir Putin that the current level of defense spending is leading to a serious increase in the budget deficit. He writes Bloomberg quoted sources. Material is available by subscription, and retold by publication The bell.
Officials proposed cutting military spending, but Putin instructed the Finance Ministry to look for savings in other budget items without affecting defense. Bloomberg described it as “the most dangerous sign of internal divisions in Moscow” since the beginning of the large-scale Russian-Ukrainian war.
The Ministry of Defense and some Kremlin representatives are not only resisting such cuts, but are also demanding additional funding. They fear that cutting defense spending will hurt the economy, as many Russian companies rely on defense contracts, the agency wrote.
Two sources close to the government estimate that the Defense Ministry’s deficit in 2026 could reach three trillion rubles ($36 billion).
According to Bloomberg, when drawing up the 2026 budget, officials hoped to end the war. They hoped that after Putin’s meeting with US President Donald Trump in Alaska, military spending would be reduced in the second half of 2026. But peace did not come, and the sharp rise in oil prices due to the war in the Middle East is not enough to solve Russia’s problems. In order to achieve a significant improvement in the situation, the oil price must remain above $100 per barrel for at least a year.
The Financial Times reported at the end of May that the head of the Ministry of Finance of the Russian Federation, Anton Siluanov, requested last February to reduce expenditures on all budget items for 2026, except for the army.
The latest version of the Russian budget for 2026 stipulates a deficit of about 1.6% of GDP (3.79 trillion rubles).
Budget deficit in the first quarter It consists of 2.5% of GDP (5.9 trillion rubles). This is the worst indicator since the beginning of a large-scale war. The Ministry of Economic Development of the Russian Federation reduced the forecast for GDP growth in 2026 three times – from 1.3% to 0.4%.