Russian President Vladimir Putin has signed into law a new federal budget for 2025, marking a significant increase in defense spending amid the ongoing war in Ukraine. The budget allocates a record 13.5 trillion rubles (119 billion euros) to national defense, representing 32.5% of total expenditures, up from 28.3% this year. This adjustment underscores the Kremlin's prioritization of military funding as the war nears its third year. Lawmakers approved the budget in late November, and its publication followed shortly after.

The federal budget outlines anticipated revenues of 40.296 trillion rubles (378.5 billion dollars) for 2025, with expenditures projected at 41.469 trillion rubles (389.52 billion dollars), resulting in a deficit of 1.173 trillion rubles (11.02 billion dollars). Budget forecasts for subsequent years suggest steady increases in both revenues and expenditures, alongside GDP growth projections of 2.5% in 2025, 2.6% in 2026, and 2.8% in 2027. Inflation is expected to remain at 4.5% in 2025 and stabilize at 4% in the following years.

Analysts note that while increased military spending enhances Russia’s financial commitment to its armed forces, this may not translate directly into greater battlefield effectiveness. A significant portion of the funds is allocated to compensations for soldiers, veterans, and their families. According to the Institute for the Study of War (ISW), these expenditures could strain the Kremlin’s ability to maintain social programs, potentially challenging domestic stability and resilience.

The economic burden of sustaining heightened defense spending adds pressure on the Russian economy, already grappling with sanctions and resource constraints. The federal budget projects further deficits in 2026 and 2027, with shortfalls rising to 20.5 billion dollars and 25.9 billion dollars, respectively. Meanwhile, inflation and economic uncertainty remain key challenges for the Kremlin as it seeks to balance military ambitions with broader economic stability.

The approval of the budget coincides with heightened tensions in the conflict. Moscow recently threatened strikes on Kyiv’s government buildings, citing Ukraine's use of advanced Western-supplied weapons. Russia has also intensified aerial attacks targeting Ukraine’s energy infrastructure. These developments come as European Union leaders visited Kyiv to reaffirm support for Ukraine, underscoring the geopolitical stakes involved.

Background:

The war in Ukraine, which began in February 2022, has escalated into a prolonged conflict with significant global implications. Russia initially launched a large-scale invasion but encountered strong resistance from Ukrainian forces bolstered by Western military aid. The conflict has led to massive casualties, extensive displacement, and global economic repercussions. Western sanctions have aimed to weaken Moscow's war effort, but Russia continues to allocate substantial resources to sustain its military operations.

Observers remain cautious about the implications of Russia’s record defense spending. While it reflects a prioritization of military objectives, it also signals potential vulnerabilities in managing broader economic and social challenges.