Moscow's proposed spending plans for the next three years signal that Vladimir Putin has no intention of ending the war he started in Ukraine, an economic analyst has told Newsweek.
A Bloomberg report this week has shown that Putin wants to push up defense spending in 2025, which is already at record levels, and comes as his Ukrainian counterpart Volodymr Zelensky is in the U.S. touting a "victory plan" to end the war.
The outlet said it had seen projections that the Russian government plans to increase military spending by more than a quarter next year—from 10.4 trillion rubles ($112 billion) to 13.2 trillion rubles ($142 billion), or 6.2 percent of Russia's gross domestic product (GDP).
"The main thing that the draft Russian budget shows is this—Putin has no intention of stopping the war," Boris Grozovsky, an expert on Russia's economy from the Wilson Center think tank, told Newsweek. "He is determined to continue and believes he will win in a war of attrition."
Bloomberg calculates spending on the army and security forces will hit 40 percent of total budget expenditure. This would mean that more funding will go on Russia's military than combined spending on education, health, social policy and the economy.
Nearly one third of budget expenditures are classified, reaching 12.9 trillion roubles ($139 billion) next year which is up from 11.1 trillion ($120 billion) this year while the budget deficit for 2025 is expected to be only 0.5 percent of GDP.
Grozovsky said that there is a stark difference between Russia's ability to increase its arms production and Ukraine's reliance on its Western allies, who are providing just enough weapons to keep its defenses from collapsing.
"Putin has no such constraints," he said. "The Finance Ministry expects the 2025 budget to be almost deficit-free, despite a 27 percent increase in military spending."
This will be achieved in part by growth in revenues from oil, gas, VAT, import duties and taxation of personal and corporate incomes, he said.
There are also optimistic forecasts for Russia's economy, with official estimates that GDP will increase by 3.9 percent this year, according to finance minister Anton Siluanov. These will dip but return to 3 percent by the end of the decade although independent forecasters have given lower figures.
Bloomberg reported a drop in crude oil exports to the lowest levels in eight months and sanctions have added turbulence to sales of Russia's biggest export.
However, Grozovsky said that Russia's budget revenues in the first eight months of 2024 have reached 23 trillion roubles ($248 billion)—a year-on-year increase of 35.5 percent and that half of that increase will go to boost military spending.
"After two years of dramatic increases in military spending, Russia will not only maintain it, but increase it further," he said.
Newsweek has contacted the Russian finance ministry for comment.
Disclaimer: The copyright of this article belongs to the original author. Reposting this article is solely for the purpose of information dissemination and does not constitute any investment advice. If there is any infringement, please contact us immediately. We will make corrections or deletions as necessary. Thank you.
