Actual spending on defence is classified and could rise even further, said Alexander Kolyandr, a senior fellow at the Center for European Policy Analysis.

Moscow: Russia plans to sharply increase defence spending, cut funding for education and raise taxes next year as costs mount in its war with Ukraine, draft budget documents show.

The budget comes as the Ukraine war grinds through its fifth year, with both sides intensifying long-range strikes and Moscow pummelling Kyiv in daily air attacks.

Here’s what we know about the plans, which have been submitted to Russia’s lower house of parliament for approval:

Defence Spending To Soar

The government plans to spend a record 17.1 trillion rubles ($204 billion) on defence in 2027, around 26 percent higher than last year’s forecast for 2027, according to the draft budget.

Defence spending will account for more than a third of all outlays and will be higher than spending earmarked for healthcare, education and social welfare combined, the documents show.

While the documents forecast defence spending will decrease in 2028 and 2029, Russia has repeatedly overshot long-term defence spending forecasts since launching its Ukraine offensive.

Actual spending on defence is classified and could rise even further, said Alexander Kolyandr, a senior fellow at the Center for European Policy Analysis.

“The published totals are merely an opening bid in the negotiation between the finance ministry and the security establishment,” he said in an article last week.

Social Spending Squeezed

Unveiling the draft budget last week, Russia’s finance minister Anton Siluanov described both funding for social welfare and defence spending as a “priority”.

But the budget documents show big cuts in non-military sectors, including social policy.

Planned outgoings on healthcare and education are set to drop by more than five percent each compared with original plans for 2027, while funding on social programmes are set to plunge by more than six percent.

Among the planned cuts are the federal government’s anti-cancer programme, which is set to lose around 97 per cent of its original budgeted funding, the documents show.

“The government is cutting back on civil servant pay and reducing their numbers, while slashing infrastructure projects, including construction and roadwork,” columnist Boris Grozovsky said in an article for the Important Stories media outlet on Tuesday.

To cover the shortfall, the government has proposed tax hikes, among them higher rates on bank deposits and property sales.

Debt Is Up

Russia has clocked a deficit each year since launching its Ukraine offensive.

Total shortfalls are estimated to be around 5.4 trillion rubles ($64.4 billion) in 2027, more than 70 percent percent higher than the 3.2 trillion ruble deficit for 2027 forecast last year.

State debt is set to rise above 20 percent of GDP in 2027, which is low for international standards but above the level Russia’s finance ministry had previously described as “safe”.

And total government borrowing in 2027 is estimated to be about 43 percent more than had been originally planned last year.

“There’s not enough money,” Grozovsky said.

“The government is sending a signal to everyone: don’t count on budget funds: they’ll go to those who absolutely must be given them.”