Russia's defense spending threatens budget stability

Russia’s finance ministry and central bank have warned President Vladimir Putin that the war‑related defence outlays are reaching an unsustainable level. According to Bloomberg documents, current defence spending could consume almost 40% of the state budget and push the fiscal deficit to a dangerous margin.

Officials say the defence ministry is still seeking roughly €36 billion in additional funding, while Putin has asked the finance ministry to identify cuts in other areas before touching defence spending. The war in Ukraine is being financed largely by oil revenues, but a temporary rise in oil prices is insufficient; the national welfare fund has shrunk by about 60% since the 2022 invasion, and roughly 500 billion roubles (under €6 billion) were drawn from it in the first two months of the year.

The fiscal strain is sparking rare public criticism within Russia and could force the Kremlin to consider deeper budget adjustments if oil prices do not stay above $100 per barrel for an extended period.