Anastasia Ryabokon19:27, 01.06.26

The Russian budget can no longer afford military spending, but the Russian Ministry of Defense insists on continuing the war.

Government officials have warned Russian dictator Vladimir Putin that Russia can no longer afford the costs of a war with Ukraine, Bloomberg reports , in a serious sign of internal divisions within the Kremlin.

Russian economists from the Ministry of Finance and the Central Bank say that the continuation of the war will lead to a dangerous increase in the state budget deficit. Sources of the publication say that it will be extremely difficult to get the economy out of a difficult situation.

“However, there are disagreements among politicians: Defense Ministry officials and some Kremlin representatives, determined to pursue Putin’s military goals, insist on maintaining military spending. In their opinion, reducing it would cause serious damage to the economy, since many enterprises depend on contracts related to the military industry,” the article says.

Sources also said that Putin has ordered cuts to all spending except military spending. And the Defense Ministry is not only resisting the cuts, but is also demanding additional funding. Military spending, on the contrary, is going to increase to cover a budget deficit of $36 billion.

Journalists write that at the time of the budget, “there were hopes that the war would end after the Alaska summit.” But that did not happen, and now “Putin faces a difficult choice, responding to internal warnings about the consequences of war.” His frustration is even evident in public, when he demanded an explanation for why it was not possible to avoid a slowdown in growth.Read also:

At the same time, the situation is not saved by the increase in oil prices due to the war in Iran. Russian economists believe that for this to happen, the price of oil must remain above $100 per barrel for at least a year. And already now the Russian budget deficit has grown to 2.5% of GDP, which is approximately 50% higher than the annual plan.

To save the economy, which is also weakened by sanctions, the Russian government raised taxes this year. But to continue fighting the budget deficit, they need to cut spending or start looking for new sources of revenue. For example, the possibility of introducing a tax on excess profits for some raw material producers and banks is being considered. There are also reports of job cuts in the Moscow government.

(C)UNIAN 2026