Senior Finance Ministry and central bank officials have warned Vladimir Putin that defense spending is driving the federal budget deficit to unsustainable levels, Bloomberg reported, citing people familiar with the discussions.
The officials proposed cutting military spending, but Putin told the Finance Ministry to find savings elsewhere in the budget and leave defense untouched. Bloomberg described this as the starkest sign of internal disagreement in Moscow since the start of the full-scale invasion of Ukraine.
According to Bloomberg, the Defense Ministry and some Kremlin officials are not only resisting such cuts but also demanding more funding. They fear that scaling back defense spending would damage the economy, since many Russian businesses depend on defense contracts.
Two people close to the government told Bloomberg that the Defense Ministry’s shortfall in 2026 could reach three trillion rubles ($36 billion).
When drafting the 2026 budget, officials had assumed the war would be over by the end of the year, Bloomberg reported. They expected that military spending in the second half of 2026 could be cut following Putin’s meeting with U.S. President Donald Trump in Alaska. But peace has not come, and a sharp rise in oil prices driven by the war in the Middle East has not been enough to solve Russia’s problems. Any meaningful improvement in Russia’s fiscal position would require oil to stay above $100 a barrel for at least a year.
According to a late-May Financial Times report, Finance Minister Anton Siluanov had already asked in February that spending across all 2026 non-military budget lines be cut.
The most recent revision of Russia’s 2026 federal budget projects a deficit of roughly 1.6% of GDP (3.79 trillion rubles).
In the first four months of the year, the budget deficit reached 2.5% of GDP (5.9 trillion rubles) — the widest deficit since the start of the full-scale war. The Ministry of Economic Development has slashed its forecast for economic growth in 2026 to 0.4 percent, down from an earlier projection of 1.3 percent.
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