The government is also spending more on servicing its debt as high interest rates increase borrowing costs.
Those measures have angered some supporters of the Kremlin, particularly after they were announced following this month’s parliamentary election.
Russia is preparing to cut spending on welfare, education and healthcare in its 2027 federal budget while raising taxes, as the government struggles to meet the rising cost of its war in Ukraine, according to fiscal documents reviewed by Reuters. The new budget would reduce spending on social policy by 7% from the initial plan.
The pro-Kremlin United Russia party is set to retain a constitutional majority, while Russian authorities have repeatedly said that winning the war in Ukraine takes priority over other spending needs. This area covers state pensions, payments to war veterans and maternity benefits. Russia is preparing a three-year budget to improve long-term financial planning, but its budget projections have repeatedly been revised as the war has continued. The government has also missed its annual deficit targets several times. The new State Duma is expected to approve the budget. Russia’s financial burden is not limited to military spending. The government is also spending more on servicing its debt as high interest rates increase borrowing costs.
Debt-servicing costs in 2027 are expected to be 21.6% higher than originally planned. They are projected to account for 9.4% of total government spending next year and could rise further to 10.6% by 2029.