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Russia's war spending on track to exceed budget by 28 billion dollars, forcing Kremlin to consider deep cuts
Russia's spending on the war in Ukraine is on track to blow through its budget by 28 billion US dollars this year, according to the Financial Times. The Kremlin is being forced to consider deep spending cuts in coming years despite higher energy revenues.
Russia's spending on the war in Ukraine is on track to blow through its budget to the tune of 28 billion US dollars this year, according to a Financial Times investigation cited by Bloomberg. The massive overrun is forcing the Kremlin to consider deep spending cuts in the coming years as the fiscal toll of the prolonged conflict mounts.
While higher energy prices have provided some relief to Russian coffers, the Financial Times reports that this boost has been tempered by payments made to Russian oil companies to limit domestic petrol price rises. The net effect is that energy revenues have not been sufficient to cover the ballooning military expenditure.
The 28 billion dollar budget overrun reflects the enormous cost of sustaining military operations, paying soldiers' salaries and bonuses, replacing destroyed equipment, and maintaining the war economy. Russia has significantly expanded its defence industrial base since the invasion began, but at considerable fiscal cost.
The pressure on Russia's budget comes at a time when the country's economy is already grappling with elevated inflation, labour shortages driven by military mobilisation, and the impact of Western sanctions on trade and technology imports. Consumer prices have risen sharply, squeezing ordinary Russians' purchasing power.
Analysts warn that the combination of runaway military spending and the need for eventual austerity could create significant domestic political challenges for the Kremlin. The war's economic toll is increasingly difficult to conceal from the Russian public, even as state media continues to project confidence, Bloomberg reported.