On June 10, Russia’s State Duma amended the Budget Code, giving the government the power to exceed federal spending caps and borrow beyond the limits set by the approved budget.

The bill was pushed through at breakneck speed. Prime Minister Mikhail Mishustin submitted it to parliament at the start of the week, and by midweek, lawmakers had passed it in all three readings in a single day.

As the independent Russian political newsletter Faridaily noted after reviewing footage of the debate, Andrei Makarov, head of the Duma’s budget and tax committee — who recently acted as the resident voice of reason at the St. Petersburg International Economic Forum — openly acknowledged that “the law is urgently needed.”

The government has given itself the right to several maneuvers to deal with mounting budget pressures in 2026:

• First, the cabinet will be able to increase federal spending beyond the planned 44.1 trillion rubles — bypassing the budget law and without having to publicly disclose how the additional funds will be used (with the war clearly the main priority).
• Second, it will be allowed to borrow domestically beyond the ceiling for internal public debt set by the same budget law. In practice, this means the Finance Ministry can borrow as much as it deems necessary.
• Third, regions facing cash shortfalls will be able to request funds from the federal government to cover gaps until the next month, with loans issued at a symbolic interest rate of 0.1 percent. Regions will also be allowed not to repay a third of their budget loans until 2030 (the remaining two-thirds have already been written off). They will be allowed to spend all the funds saved through these write-offs and restructurings on the war; previously, at least half of that money had been earmarked for housing and utilities.

Russian officials insist there isn’t. Deputy Finance Minister Irina Okladnikova, presenting the amendments in the Duma, responded to a lawmaker’s claim that the ministry had pushed the country into a budget crisis by saying that the bill is meant precisely to “prevent” one.

Okladnikova said that developments affecting budget revenues and spending are now occurring “not every month or quarter, but every day.” To ensure uninterrupted funding for priority sectors — above all, the war — the government needs what she called “room to maneuver.”

Her boss, Finance Minister Anton Siluanov, had previously announced an increase in spending, citing the same “need to concentrate additional resources on key priority areas.”

From January through May, Russia’s budget deficit reached 6.01 trillion rubles (2.6 percent of GDP), about one and a half times the full-year target of 3.8 trillion (1.6 percent). The pace of deficit growth slowed sharply in May: revenues rose thanks to higher oil prices — driven in part by the war in Iran — and an increase in value-added tax, while spending slowed for the first time this year.

Even so, total expenditures in the first five months of 2026 were up 17 percent year over year, reaching nearly half of the annual plan — despite the budget projecting just 4.2 percent growth for the year as a whole.

Tracking these dynamics will become more difficult under the new rules. In effect, the government has made its own spending less transparent. Some clarity may come with the draft budget for 2027–2029, which is expected to be submitted to the Duma this fall.

Higher domestic borrowing could also have downsides, most notably by adding to inflationary pressures — something Russia’s Central Bank is already fighting.