More guns, less schooling: Russia’s 2027 budget goes all in on war

Moscow, Oct 4 — Russia is preparing to significantly boost its defense budget while slashing funding for education and raising taxes in response to mounting costs from the ongoing war with Ukraine, according to draft budget documents. As the conflict enters its fifth year, both sides have escalated long-range strikes and daily air attacks on Kyiv.

The projected budget, submitted to Russia's lower house of parliament for approval, reveals that defense spending will surge to a record 17.1 trillion rubles (US$204 billion; RM833.1 billion) in 2027, a 26 percent increase from the previous year's forecast. Defense spending will constitute more than a third of all expenditures and surpass the combined funding for healthcare, education, and social welfare.

Although defense spending is expected to decline in 2028 and 2029, Russia has consistently exceeded long-term defense spending forecasts since initiating its Ukraine offensive. The actual defense spending may rise further, according to Alexander Kolyandr, a senior fellow at the Center for European Policy Analysis, who notes that published totals are only an opening bid in negotiations between the finance ministry and security agencies.

Social spending, including healthcare, education, and social programs, faces substantial cuts, with healthcare and education budgets set to decrease by more than five percent each compared to the original 2027 plans, and social programs facing a reduction of over six percent. Among the targeted cuts is the federal government's anti-cancer program, which will lose nearly all of its original budgeted funding.

To bridge the funding gap, the government intends to raise taxes, including deposit rates on bank accounts and property sales. Russia has incurred annual deficits since launching its Ukraine offensive, with an estimated 5.4 trillion rubles (US$64.4 billion; RM263 billion) in shortfalls for 2027, a 70 percent increase from the 3.2 trillion ruble deficit forecasted last year.

State debt is projected to exceed 20 percent of GDP in 2027, surpassing Russia's finance ministry's previously considered "safe" threshold. Government borrowing for 2027 is anticipated to be about 43 percent higher than initially planned. Columnist Boris Grozovsky commented that the government is sending a message that budget funds will primarily benefit those deemed essential, leaving little for other sectors.