Russia's defence budget surge meets internal opposition
An unusual situation has occurred in Russia, as the Communist Party of the Russian Federation and the "Just Russia – For Truth" group have almost unanimously opposed the country's new financial plan, reports "Rzeczpospolita." The budget proposal includes a 30% increase in spending on wartime activities led by Vladimir Putin.
22 November 2024 06:32
In 2025, defense spending is projected to reach 13.5 trillion rubles (approximately $180 billion CAD), a 30% increase from the current year. This sum constitutes 6.31% of Russia's GDP.
Russia's wartime budget
In the following year, defence spending is expected to be 12.8 trillion rubles (about $170 billion CAD), and in 2027 it will be 13.1 trillion rubles (around $177 billion CAD). Altogether, Russia plans to allocate at least 40% of its budget to defence and national security from 2025 to 2027.
Since 2022, Moscow has comprehensively reoriented its economy toward wartime activities, which has included an intensive development of the military industry and a significant increase in employment in this sector. Russia's military budget for the current year was already at a record high, exceeding the 2023 budget by 70%. Alongside investments in the security sector, it accounted for 8.7% of GDP.
The budget law still requires approval from the upper house of parliament, the Federation Council, and then President Vladimir Putin must sign it.
"According to the data posted on the Duma's website, 77 deputies abstained from voting on the budget in the third and final reading. There was also one vote 'against.' The independent deputy Oksana Dmitriyeva dared to cast that vote," reports "Rzeczpospolita."
Central Bank raises rates
As reported on money.pl, in October, the Central Bank of Russia raised the interest rates to 21%, the highest level in two decades, and market analysts predict that they could rise as high as 23% by the end of the year.
This is an unusual situation during wartime, as central banks usually avoid curbing economic activity. "The Economist" estimates that Kremlin's actual war expenditures are significantly higher than what the official Putin regime reports.
Nearly 560,000 soldiers from internal security forces, many of whom have been deployed in occupied Ukraine, are funded outside the defence budget. The same applies to private military companies that have emerged across the country.
