Russia to Boost Defense Budget as Ukraine War Drags On

The Kremlin plans a 25 percent increase to more than $145 billion in 2025, a year in which it had intended to cut military spending.

The Russian government intends to increase its defense expenditures by about a quarter next year, according to a draft state budget released on Monday, signaling the Kremlin’s continued determination to allocate vast resources to the war in Ukraine.

Russia’s military spending in rubles has already more than tripled since President Vladimir V. Putin’s decision to invade Ukraine in 2022 and will reach 13.5 trillion rubles next year, a figure unmatched since the heights of the Cold War.

The draft document, submitted for review to the State Duma, the country’s lower house of parliament, calls for more than $145 billion in military spending in 2025, from $116 billion this year. It is a bold sign that the Kremlin anticipates that the war is likely to continue well into next year. In 2023, it had planned to reduce military spending by about 21 percent in 2025, but as the war dragged on, it had to reverse course.

As a rule, Russian lawmakers pass proposed budgets with minor amendments.

The increase means that the Kremlin is allocating more than 32 percent of its state budget to defense, more than to pensions and other social expenditures, health care and education combined.

“We are reaching the point when cannons become more important than butter,” said Alexandra Prokopenko, a former Russian central bank official now at the Carnegie Russia Eurasia Center in Berlin. “The main priority is the ongoing war in Ukraine and the restoration of arsenals and the country’s military potential.”

The Russian government anticipates 2025 revenues to rise to more than $433 billion from $388 billion this year, a result of increased income, corporate and other taxes, and the overall growth of its economy, which, in turn, is being boosted by increased military expenditures.

Overall, Russia’s budget would increase more than 11 percent in 2025. But economists have been warning that injecting vast sums of money into Russia’s overheating economy risks pushing it into an inflationary spiral. In September, the country’s central bank increased the key interest rate to 19 percent, making loans, including mortgages, prohibitively expensive.

After the budget announcement, MMI, a leading Russian economy and investment channel on the messaging app Telegram, said that “we can unequivocally say that we are dealing with a new inflationary shock from the side of fiscal policy.”

But in a war of attrition in Ukraine, the Kremlin might have little choice but to spend more. After more than 31 months of war, Russia needs to recruit and train servicemen and replace weapons and equipment. Mr. Putin recently ordered an increase in the size of Russia’s active military force by 180,000, to 1.5 million, but some analysts doubt that the army might reach that size.

At the end of July, Mr. Putin also doubled the federal sign-up bonus for new recruits to nearly $4,300, signaling increased difficulty in attracting them. The same month, an additional sign-up bonus in the city of Moscow reached $20,400. This summer, Moscow has been plastered with posters saying that on average an army recruit would get nearly $56,000 after one year of service in Ukraine. The average salary is about $880 a month in Russia.

And as the country brings on more workers to churn out more weapons and equipment, the unemployment rate has dropped to 2.4 percent. Unemployment, in turn, forced an increase in wages, further boosting inflation.

Oleg Matsnev contributed reporting.

Our Coverage of the War in Ukraine

• Two Soul Mates Reconnect: Sofia Malina and Polina Muzhychkova met in the Ukrainian city of Mariupol, but were separated after it came under brutal assault by Russian forces. They were reunited after a long and harrowing saga.
• Russia’s Nuclear Doctrine: President Vladimir Putin of Russia said that he planned to lower the threshold for his country’s use of nuclear weapons, an escalation in his efforts to deter the United States from expanding its aid to Ukraine.
• A National Icon Fights: Serhiy Zhadan is a beloved Ukrainian poet and rock star. Furious over Russia’s invasion, he enlisted in the army even as his band still plays and his readings fill halls.

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