Putin's Finance Team Warns Defense Spending Is Unsustainable
Get the Geopolitics newsletter
Daily geopolitics — wars, elections, sanctions, the diplomatic moves that move markets. Free.
- Senior Finance Ministry and central bank officials privately warned Putin that defense spending is driving Russia's federal budget deficit to unsustainable levels and proposed cutting military outlays, but Putin ordered the ministry to find savings elsewhere and leave defense untouched — the starkest sign of internal disagreement in Moscow since the full-scale invasion, per Bloomberg.
- The Defense Ministry and some Kremlin officials are resisting any cuts and demanding more funding, arguing that scaling back defense spending would damage the economy because many Russian businesses depend on defense contracts; the Defense Ministry's 2026 shortfall could reach 3 trillion rubles ($36 billion).
- Budget planners had originally assumed the war would end by late 2026, penciling in military spending cuts after Putin's meeting with President Trump in Alaska, but peace has not come and a Middle East-driven oil price surge has fallen short — meaningful fiscal improvement would require oil above $100 a barrel for at least a year.
- Finance Minister Anton Siluanov asked in February that all 2026 non-military budget lines be frozen, and the revised federal budget projects a deficit of roughly 1.6% of GDP (3.79 trillion rubles).
- The actual deficit for January–April 2026 already hit 2.5% of GDP (5.9 trillion rubles) — the widest gap since the start of the full-scale war — while the Ministry of Economic Development slashed its 2026 GDP growth forecast from 1.3% to 0.4%.
Why it matters: Putin is choosing to protect a war economy that his own finance officials say is becoming fiscally untenable: the deficit has already run at 2.5% of GDP in four months, the growth forecast has been cut to 0.4%, and the budget was built on a false assumption that the war would end in 2026 — meaning the longer fighting continues, the harder it becomes for Moscow to fund it without deeper civilian cuts.
