Russian Central Bank Joins Revolt Against Military Spending

(MOSCOW, RUSSIA) – Russia’s top financial officials have issued a stark warning that the Federation can no longer sustain the economic cost of the war against Ukraine, according to a Bloomberg report.

Finance Minister Anton Siluanov and representatives of the Central Bank of Russia have directly cautioned the Russian dictator Vladimir Putin about mounting pressure on the federal budget driven by military expenditures. The warning marks a serious split inside the Kremlin between those described as rational and those who are not. Putin falls into the latter group alongside the Russian Ministry of Defence, which continues to demand more funding.

The budget deficit has already exceeded 6 trillion roubles ($65.5 billion) within the first four months of 2026, a sum initially forecast for the entire year. In 2025, officials had an optimistic prediction that the deficit would shrink. Instead, it has grown significantly. Serious budget deficits are also accumulating across different regions of the Russian Federation, and no viable solutions appear to exist.

Attempts to increase VAT and the overall number of taxes have failed to stabilise the situation. These fiscal measures have only resulted in more Russian businesses closing. In reality, state income has fallen, proving that this approach, which was already tested previously, provides no way out. Despite this evidence, Putin refuses to listen.

The 2026 budget allocates one third of all state spending to military expenses. Officials describe this as defence spending. For the first time, that description has acquired a grim accuracy because, while Russia continues attacks on Ukrainian territory, the Russian Federation itself is now an active war zone. Ukrainian drones regularly visit numerous regions, reaching deep into the Asian part of Russia and shattering the myth that the country’s vast size provides protection. Moscow endures constant attacks with flights cancelled, and air raid alerts have reached Yamalo Nenets in the Russian Arctic.

The Ministry of Finance has logically asked for a halt to the war and a reduction in military expenses. Putin, however, remains obsessed with Ukraine and supported by individuals in the Ministry of Defence who are believed to have earned billions during the conflict. They cheer for more expenditures. He has ordered the Ministry of Finance and advised the central bank to cut spending on other issues while maintaining the focus on the military campaign. This stance is expected to accelerate the collapse of the Russian Federation.

A critical signal of deep economic problems is the country’s official GDP. The Russian GDP is smaller than that of Italy or individual American states such as Texas or California. The official growth prediction stands at just 0.4 percent, indicating internal economic destruction. Hopes of leveraging oil sales, perhaps due to the conflict involving Iran, have also been dashed.

Ukrainian drone strikes have destroyed oil refineries in central and southern Russia, along with critical terminals. The first signs of a major gasoline crisis are now obvious, particularly on the temporarily occupied territories like Crimea, where fuel coupons have been introduced. At some petrol stations, people cannot obtain gasoline even with these coupons, as limits on purchases have been imposed. This crisis is expected to spread to other Russian regions.

There is no pathway to stop the growth of the budget deficit. This implies no salaries for teachers, doctors, and others dependent on the federal budget. It means no money for social needs and more problems with electricity and hot running water. In the far east, people are already unable to pay their utility fees.

Even as the Ministry of Finance and the Central Bank voice these realities, Putin and the Ministry of Defence pretend not to hear. This demonstrates the level of obsession driving the dictator. It fuels the belief in the existence of internal fights between the FSB and the presidential administration, with factions looking for a change in the Kremlin leadership.