Russia’s 2026 military budget remains extremely large despite some cuts — economist

PhD in Economics and member of the National Bank of Ukraine Council Vasyl Furman commented on this on Espreso TV. 

“Frankly, this (Russia’s draft budget — ed.) doesn’t differ much from the current one. Even though defense spending is supposedly set to decrease, it remains extremely massive. Looking at the 2025 budget, every second ruble goes to funding Russia’s military-industrial complex. That’s a huge amount. Their war spending, for instance, exceeds 20% of GDP. In European countries, the widely accepted benchmark is around 3–3.5%, several times lower than that. Here, it’s many times higher.

It’s clear that a militarized economy cannot sustain itself in the long term and requires enormous expenditures. They were lucky with high oil prices — we remember how sky-high they were in 2022 and 2023, reaching $100 per barrel or more. Then oil prices started to fall, and today the price of their Urals oil is just above $50, while the budget assumes a price of around $69 per barrel,” he said.

Vasyl Furman noted that a second factor affecting Russia’s revenue shortfall is sanctions.

“No matter what they say about sanctions not working, they clearly have a significant impact. Of course, it would be better if their enforcement were stronger and all countries ensured compliance worldwide, but in any case, sanctions work. Another key factor that used to support their finances — the National Wealth Fund — has essentially been depleted this year. That’s why, when they drafted the 2026 budget, they also included legislation to raise taxes in Russia. For example, VAT was increased by 2%, and tax benefits for small and medium businesses were reduced, which is a major blow,” he explained.

The economist also noted that Ukrainian military actions inflict enormous losses on Russia’s budget.

“Additionally, there are huge losses inflicted by the Ukrainian army, not only on the front lines where we hold defense, but also deep inside Russia, targeting their fuel and energy infrastructure. This amounts to tens of billions of dollars in damage to the Russian Federation. Naturally, they now have to find resources that aren’t sufficient — resources that would go to the war, but instead must support their civilian oil infrastructure. The steps we are taking are 100% correct; this is our trump card. President Trump said Ukraine has no trump cards — Ukraine does have them, and each year more and more appear,” Vasyl Furman added.