Russia's 2027 draft budget raises defense spending to a wartime record while cutting pensions, education, healthcare and infrastructure to pay for it.
Russia will pay for next year's war effort by cutting pensions, schools and hospitals, according to fiscal documents behind a 2027 draft budget built on higher taxes, heavier borrowing and the deepest social retrenchment since the invasion of Ukraine began more than four years ago.
Moscow plans to spend 17.1 trillion roubles -- about $202.58 billion -- on defense in 2027, roughly 27 percent more than the 13.5 trillion roubles originally budgeted for the year and the largest military outlay since the war started in February 2022. That money has to come from somewhere, and the documents show it coming out of the civilian economy.
Social policy, the section that covers state pensions, payments to war veterans and maternity benefits, will shrink by 7 percent. Education funding falls by 6 percent, healthcare by 6.8 percent. Spending on roads, other infrastructure and agricultural subsidies, grouped under the budget's "national economy" heading, drops 7.4 percent.
The Russian budget has deteriorated steadily across four and a half years of war. Moscow has burned through its fiscal reserve fund, expanded borrowing and raised taxes to keep pace with military spending, and the 2027 plan pushes all three levers harder.
Debt-servicing costs will jump 21.6 percent above the original plan, reaching 9.4 percent of total spending in 2027 before climbing to 10.6 percent by 2029. Those figures reflect the high interest rates the central bank has held to fight inflation, combined with a growing pile of new borrowing.
Kremlin planners are drafting a three-year budget in an attempt to restore long-term planning, a discipline the war economy has eroded. Yet each year the numbers have been revised sharply upward, and the government has repeatedly missed its own annual deficit targets. The reserve cushion that once absorbed those misses is largely gone.
Economists outside Russia have watched the same trend for months. Rising debt service means an ever-larger share of the budget is consumed simply by the cost of past spending, leaving less room for everything else -- including the war itself.
The draft budget pairs its social cuts with fresh tax increases and a larger-than-expected rise in utility tariffs, a combination announced only after September's parliamentary vote. The timing was deliberate, and it has not gone unnoticed.
Even some reliable supporters of the Kremlin have complained publicly about the squeeze. The tax hikes land weeks after Russians cast ballots in a wartime parliamentary election that handed the pro-Kremlin United Russia party another constitutional majority.
That majority matters now. The new State Duma is expected to approve the budget with little resistance, and officials have been blunt that winning the war in Ukraine takes priority over other needs. Domestic programs, in other words, are being asked to absorb the cost of a conflict the government insists it will finish on its own terms.
The headline reductions understate what many Russians may experience. The federal budget does not include regional and municipal budgets, which carry a significant share of social spending -- from local clinics to school maintenance to heating subsidies.
When the center tightens, regional governments are typically forced to tighten further, because they cannot borrow on the same scale and have fewer revenue sources to tap. A 6 percent cut in federal education funding does not translate cleanly into a 6 percent cut on the ground; it often compounds.
Utility tariffs add a second pressure point. Higher heating and electricity bills hit pensioners and low-income households hardest, exactly the groups whose benefits are already slated to shrink. The combination of smaller transfers and larger bills is the kind of squeeze that shows up in household budgets long before it shows up in headline economic data.
The budget now moves to the State Duma, where approval is expected, but the debate will expose how much internal grumbling the Kremlin is willing to tolerate as costs rise and benefits fall.
Three markers will show whether the plan holds. First, whether the government revises the defense number upward again, as it has every year of the war. Second, whether inflation forces the central bank to keep rates high, feeding the debt-service spiral. Third, whether winter energy demand and tariff increases produce visible unrest in the regions.
For now, Moscow has made its choice plain: guns before pensions, and the bill deferred to Russian households. The documents behind the 2027 plan spell out who pays for the war -- and it is not the defense ministry.
Russia's 2027 draft budget raises defense spending to a wartime record while cutting pensions, education, healthcare and infrastructure to pay for it.
freedomlinedispatch.com
