Russia is facing a budget overspend of at least $28bn (£22bn) this year due to the war in Ukraine, prompting the government to freeze billions in non-military spending, according to a letter from Finance Minister Anton Siluanov seen by the Financial Times.
In February, Siluanov urged the cabinet to freeze around ₽2.9 trillion ($40.8bn) in planned non-war-related spending, warning that the ₽2trn overspend could rise to ₽4trn in a “negative scenario”. He also anticipated additional overspends of ₽4trn in 2027 and 2028.
Russia’s budget deficit had already swollen to ₽5.9trn by April, the largest since the full-scale invasion in 2022, despite ₽16.84trn allocated for defence and security this year, roughly two-fifths of the total budget.
While high oil prices linked to the Iran war have provided some relief, the war economy is showing strain. The economy ministry has slashed GDP growth forecasts for 2026 to 0.4% from 1.3%, and for 2027 to 1.4% from 2.8%.
Siluanov told Russian newspaper Kommersant that the finance ministry is revising the budget to prioritise social obligations and defence, warning that “reserves are not infinite”. He added that further cuts may be necessary as Russia cannot afford “any financial slack”.
Meanwhile, Russia’s advance in Ukraine has slowed significantly, with the Institute for the Study of War reporting that Russian forces seized just 104sq km between January and May 2026, compared to 1,619sq km in the same period last year.
