Russia Increases Military Spending to 40% of Budget Despite Economic Decline (Video)

(UKRAINE/RUSSIA) – The Russian dictator Vladimir has approved the country’s federal budget for 2026, revealing a growing economic and military strain within the Russian Federation. Analysts note two major points of concern: the budget carries a built-in deficit equivalent to 1.6% of Russia’s GDP, and a historic 40% of federal spending is allocated to the military, police, and intelligence services.

This allocation represents the largest proportion of the budget devoted to defence and security since the collapse of the Soviet Union in 1991. Observers argue that the funding emphasis reflects both ongoing military operations in Ukraine and internal pressures on the regime.

The Kremlin’s approach relies heavily on domestic taxation to finance its priorities. Value-added tax (VAT) will rise from 20% to 22%, and the threshold for small businesses liable to pay has been reduced from 50 million roubles (approximately USD 540,000) to 10 million roubles (around USD 108,000), potentially affecting hundreds of thousands of small and medium enterprises. Analysts warn these measures could strain Russia’s domestic economy, harming social services such as education and healthcare.

Energy revenues, a key source of federal income, fell by an estimated 20% in 2025, adding pressure to the budget. The Kremlin plans to maintain high military spending despite this shortfall, diverting funds from civilian services to finance ongoing operations in Ukraine. Recent attacks on Ukrainian towns, including drone strikes targeting civilian areas, underscore the prioritisation of military objectives over domestic welfare.

Experts indicate that the budget demonstrates an absence of plans for conflict resolution. The heavy focus on security spending signals that the Kremlin is preparing for prolonged military engagement. International observers caution that diplomatic negotiations may be undermined by these financial commitments, as Russia appears unwilling or unable to reduce hostilities.

Additionally, the government has introduced new taxation on electronic devices, including laptops and phones, a measure intended to generate further revenue. Analysts argue this policy may further weaken domestic consumption and contribute to economic stagnation.

Economic projections suggest continued hardship for ordinary Russians, with the increased tax burden and shrinking social support likely to heighten public dissatisfaction. The Kremlin’s strategy relies on sustaining the regime’s military capacity while managing a fragile domestic economy, raising questions about the long-term stability of the Russian Federation.

 Features of Russia’s 2026 Budget