Russia plans record $202 billion defense budget for 2027, financed by tax hikes and borrowing
Russia is planning to raise its defense spending in 2027 by about 27%, to roughly $202.4 billion (17.1 trillion rubles) — the largest figure since the start of the full-scale invasion of Ukraine in 2022. The increase, part of a draft budget the government must submit to parliament by October 1, is to be financed through new taxes on citizens and resource companies, drawdowns from the National Wealth Fund, and sharply higher borrowing. The planned expansion comes as Ukraine struggles with its own tight budget and warnings from Kyiv that the army is short billions for defense.
Key points
- Russia plans 17.1 trillion rubles (~$202.4 billion) for defense in 2027, about 27% more than the originally budgeted figure and the largest since the 2022 invasion.
- Total Russian defense spending over the next three years is planned at roughly 50 trillion rubles (~$591.8 billion).
- The draft budget must be submitted to parliament by October 1; some military spending may be recorded under other budget lines.
- The 2026 federal budget deficit forecast has been raised to 3.2% of GDP, from a previously expected 1.6%.
- Moscow plans new taxes in 2027, including raising the rate on dividends, deposits and property sales income from 15% to 22% — affecting about 4 million people — and a 30% windfall tax on mining and metallurgical firms expected to bring in ~$2.37 billion a year.
- Russia plans to increase net borrowing in 2026 by 26% (to ~$59.2 billion) and by another 43% in 2027 (to ~$91.1 billion), and to spend ~$5.43 billion from the National Wealth Fund; state debt is projected to reach 21.7% of GDP in 2027, above the 20% threshold Russian authorities themselves consider safe.
- Ukraine's Ministry of Defense estimates its own defense spending needs could rise to $175 billion in 2027 from $155 billion in 2026, against a draft budget allocation of about $100 billion; President Zelensky said on August 24 the army is short $27 billion.
Why it matters
The 2027 plan would set a new post-invasion record for Russian military outlays and is being financed in ways that signal rising domestic fiscal strain — higher taxes on ordinary citizens and resource companies, withdrawals from the sovereign wealth fund, and borrowing that pushes state debt above the 20% of GDP level the Russian authorities themselves treat as a safety threshold. At roughly $202 billion, Russian defense spending in 2027 would be presented as about double Ukraine's, sharpening the resource asymmetry between the two sides at a moment when Kyiv is warning of a multi-billion-dollar defense funding gap and the risk of losing already-agreed international aid.
What happened
Russia is preparing a 2027 federal budget that would allocate 17.1 trillion rubles (~$202.4 billion) to defense — about 27% more than the figure originally planned for the year and the highest defense outlay since the full-scale invasion of Ukraine in 2022. Total defense spending over 2025–2027 is planned at roughly 50 trillion rubles (~$591.8 billion), though some military costs may be booked outside the dedicated defense line. The draft budget, which the government must submit to parliament by October 1, revises the 2026 federal deficit forecast upward to 3.2% of GDP (from 1.6%) and lifts total 2026 spending by 13.2% to about $575.2 billion, or 20.9% of GDP. To pay for the increase, Moscow plans new taxes in 2027: the rate on income from dividends, bank deposits and real-estate sales will rise from 15% to 22% (affecting about 4 million people); mining and metallurgical firms will pay a 30% windfall tax expected to bring in ~$2.37 billion a year; dividends to foreign shareholders of Russian companies will be taxed at 35%; and mutual funds at 15%. Russia also plans to raise net borrowing in 2026 by 26% to about $59.2 billion, and by another 43% in 2027 to about $91.1 billion, while drawing roughly $5.43 billion from the National Wealth Fund — about 11% of its liquid portion. State debt is projected to reach 21.7% of GDP in 2027, up from 19.9% in 2026 and above the 20% level Russian authorities themselves consider safe. The package comes against a backdrop of weakening oil-and-gas revenue — the 2026 forecast has been cut from ~$105.3 billion to ~$90 billion — and a reported April episode in which the Unified Treasury Account went into the red by 5 trillion rubles (~$65 billion), prompting Finance Minister Anton Siluanov to warn Prime Minister Mikhail Mishustin that the state might not make all current payments on time.
How Ukrainian sources describe it
All the supplied sources are Ukrainian outlets republishing or paraphrasing a Reuters report. They consistently foreground the scale and "record" character of Russia's planned spending, frame the increase as financing the war against Ukraine, and pair it with detail on how Moscow is paying for it — tax hikes, borrowing, and National Wealth Fund drawdowns. Several headlines emphasize that the planned 17.1 trillion rubles amounts to roughly twice Ukraine's own defense budget, presenting the spending gap as the story's central point.
Where reporting differs
Articles differ slightly in how they frame the 27% increase: most compare it against the originally planned 2027 figure of about 13.5 trillion rubles (~$159.8 billion), while others describe it more loosely as a jump over a previously budgeted baseline. There are also minor variations in the ruble-to-dollar conversion — most cite about $202.4 billion or $202.58 billion, while one piece frames the 17.1 trillion rubles as roughly twice Ukraine's defense budget rather than giving a precise dollar figure. The underlying figures consistently point to the same 2027 plan.
Background
Russia's 2026 federal budget deficit forecast has been revised upward to 3.2% of GDP from 1.6%, with total expenditures planned at about 20.9% of GDP, and oil-and-gas revenue forecasts for 2026 have been cut from about $105.3 billion to roughly $90 billion. In April, Russia's Unified Treasury Account reportedly went into the red by 5 trillion rubles (~$65 billion), and Finance Minister Anton Siluanov warned Prime Minister Mikhail Mishustin that the state might not be able to make all current payments on time. Ukrainian intelligence reported at the end of August that Russia is preparing additional mobilization waves of 300,000 people in 2026 and another 300,000 in 2027. Ukraine is simultaneously under fiscal pressure: President Zelensky said on August 24 the army is short $27 billion, Prime Minister Koretsky warned on September 14 that delays with draft laws could put $29.5 billion in international aid at risk, and the Ministry of Defense estimates Ukraine's own defense spending needs could rise to $175 billion in 2027 from $155 billion in 2026, against a draft budget allocation of about $100 billion.