The war against Ukraine, which has been going on for three years, is costing Russian taxpayers more and more.
In the first half of 2024, the federal budget spent a record 5.3 trillion rubles on defense items, according to Janis Kluge, a research fellow at the German Institute for International Security Studies, based on data from the Electronic Budget system.
Compared to the same period last year, Russia's military spending increased by 36%, or 1.4 trillion rubles. On average, the government spent 203 billion rubles a week, 29 billion rubles a day, or 1.2 billion rubles an hour on maintaining the army and purchasing weapons, according to Kluge's calculations.
As a result, in 6 months the military machine "ate" almost one and a half annual budgets of the national economy support program (3.89 trillion rubles), more than three annual budgets of the entire higher education system in the country (1.546 trillion rubles), 18 annual budgets of the national project "Healthcare" (290 billion rubles) and more than 90 annual budgets of a typical poor region - such as, for example, the Republic of Tyva (56 billion rubles).
"Especially sharply", Kluge points out, jumped secret expenses, which go mainly to purchase weapons for the front: they amount to about 1 trillion rubles per quarter. In the open part of the budget, financing of the state defense order increased by 54% compared to last year and by 126% compared to 2022.
Expenditures on military payments, including the mass recruitment of "volunteers" and contract soldiers, with which the Kremlin compensates for frontline losses, increased by 25% compared to last year and by 175% compared to 2022.
Finally, expenditures on international military-technical cooperation, which may include financing the purchase of ammunition and missiles from Iran and the DPRK, have skyrocketed "dramatically," Kluge notes. According to his estimates, this cost the budget almost 120 billion rubles in the first quarter and more than 150 billion in the second.
Initially, the government planned military expenditures of 10.8 trillion rubles in the 2024 budget, and their share of total spending — almost 30% — was supposed to be a record since the Soviet Union. But if we focus on the seasonality of budget allocations and historical data, then in fact military spending may exceed this level by almost a third, Kluge estimates: by the end of the year, they may reach 13.3 trillion rubles, or 7-8% of GDP, which corresponds to the level of military dictatorships in Africa (8.2% of GDP in Algeria, 6.3% of GDP in South Sudan).
So far, the Russian budget does not feel the pain of military spending, which has tripled compared to 2021. For four out of eight months of this year, the federal treasury was in surplus (revenues exceeded expenses), and by the end of August, its accumulated deficit amounted to only 331 billion rubles - one sixth of the annual plan.
However, falling oil prices may become a problem for the budget, Rosbank analysts point out: the cost of a barrel of Russian Urals fell below $60 per barrel for the first time since the beginning of the year in September, and has fallen by 18% compared to the end of August. The Ministry of Finance drew up the budget based on oil at $70, and the authorities are including this price in their plans for next year. Current oil levels “are definitely not comfortable for the federal budget,” especially in connection with “expenses on the SVO,” Rosbank points out.
In the first half of 2024, the federal budget spent a record 5.3 trillion rubles on defense items, according to Janis Kluge, a research fellow at the German Institute for International Security Studies, based on data from the Electronic Budget system.
Compared to the same period last year, Russia's military spending increased by 36%, or 1.4 trillion rubles. On average, the government spent 203 billion rubles a week, 29 billion rubles a day, or 1.2 billion rubles an hour on maintaining the army and purchasing weapons, according to Kluge's calculations.
As a result, in 6 months the military machine "ate" almost one and a half annual budgets of the national economy support program (3.89 trillion rubles), more than three annual budgets of the entire higher education system in the country (1.546 trillion rubles), 18 annual budgets of the national project "Healthcare" (290 billion rubles) and more than 90 annual budgets of a typical poor region - such as, for example, the Republic of Tyva (56 billion rubles).
"Especially sharply", Kluge points out, jumped secret expenses, which go mainly to purchase weapons for the front: they amount to about 1 trillion rubles per quarter. In the open part of the budget, financing of the state defense order increased by 54% compared to last year and by 126% compared to 2022.
Expenditures on military payments, including the mass recruitment of "volunteers" and contract soldiers, with which the Kremlin compensates for frontline losses, increased by 25% compared to last year and by 175% compared to 2022.
Finally, expenditures on international military-technical cooperation, which may include financing the purchase of ammunition and missiles from Iran and the DPRK, have skyrocketed "dramatically," Kluge notes. According to his estimates, this cost the budget almost 120 billion rubles in the first quarter and more than 150 billion in the second.
Initially, the government planned military expenditures of 10.8 trillion rubles in the 2024 budget, and their share of total spending — almost 30% — was supposed to be a record since the Soviet Union. But if we focus on the seasonality of budget allocations and historical data, then in fact military spending may exceed this level by almost a third, Kluge estimates: by the end of the year, they may reach 13.3 trillion rubles, or 7-8% of GDP, which corresponds to the level of military dictatorships in Africa (8.2% of GDP in Algeria, 6.3% of GDP in South Sudan).
So far, the Russian budget does not feel the pain of military spending, which has tripled compared to 2021. For four out of eight months of this year, the federal treasury was in surplus (revenues exceeded expenses), and by the end of August, its accumulated deficit amounted to only 331 billion rubles - one sixth of the annual plan.
However, falling oil prices may become a problem for the budget, Rosbank analysts point out: the cost of a barrel of Russian Urals fell below $60 per barrel for the first time since the beginning of the year in September, and has fallen by 18% compared to the end of August. The Ministry of Finance drew up the budget based on oil at $70, and the authorities are including this price in their plans for next year. Current oil levels “are definitely not comfortable for the federal budget,” especially in connection with “expenses on the SVO,” Rosbank points out.
