The Kremlin sounded the alarm on its deteriorating finances earlier this year, just as its war on Ukraine pivoted dramatically against Russian forces.
According to a letter seen by the Financial Times, Russia’s finance ministry estimated in Feb. that spending on Vladimir Putin’s war was on pace to exceed its budget by at least 2 trillion rubles this year, or about $28 billion, with a more negative scenario putting that figure at 4 trillion rubles.
The ministry also put war-related overspending at 4 trillion rubles in 2027 and 2028, while asking the cabinet to freeze trillions in non-defense outlays in the coming years.
The projected explosion in war costs comes as Russia’s budget deficit was quickly diving deeper into negative territory. The Kremlin had earlier seen a deficit of 3.8 trillion rubles for all of 2026, but it’s already 5.9 trillion rubles in the first four months of the year, according to the FT.
The deficit outlook has worsened so much that the finance ministry asked government agencies to cut non-essential spending by 10%. Economic growth is also stagnating, with GDP expected to tick up just 0.4% this year, down from a previous view for 1.3%.
