Russia Increases Military Budget to $140 Billion for 2024, SIPRI Reports

World

December 14, 2023

There is a shift in budgetary priorities within Russia, giving more attention to the military in 2024.
Volunteers including athletes from the Russian Martial Arts Union receive sniper training at Russian Special Forces University in Gudermes, Russia on December 14, 2022. Photo by Anadolu Images.

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n a significant move that underscores its ongoing military commitments, Russia is set to increase its military spending to an estimated $140 billion in 2024, according to a recent report by the Stockholm International Peace Research Institute (SIPRI). This marks a substantial 29% year-on-year increase, amounting to 12.8 trillion rubles, and will account for 35% of Russia’s total government expenditure.

The SIPRI report, released on Wednesday, notes that the projected military spending for 2024 will constitute 7.1% of Russia’s Gross Domestic Product (GDP). This increase was formalized in the new federal budget plan, which runs through 2026 and was signed into law by Russian President Vladimir Putin at the end of November.

The significant allocation towards military and war-related expenses indicates the Russian government’s firm commitment to continuing its military operations, which have now extended over 650 days. The report interprets this budgetary decision as a clear indication of Russia’s intent to pursue a successful conclusion to the ongoing war.

Read: SIPRI Report: Nuclear Powers Have Increased Their Arsenals

Budgetary priorities within Russia

Amidst these developments, the report also highlights a shift in budgetary priorities within Russia. Allocations for the “National economy” chapter have decreased from 14% of total spending in the current year to 11% in 2024. Furthermore, there is a notable reduction in funding for key social sectors, including housing (from 2.8% to 2.2%), education (from 4.8% to 4.2%), and healthcare (from 5.2% to 4.4%).

SIPRI Director Dan Smith commented on the strategic implications of these financial moves, noting that the planned reduction in military spending for 2025–26, following the sharp increase in 2024, could be indicative of President Putin’s strategy to expedite the end of the war. This is particularly significant in light of the Russian presidential election scheduled for 2024.

The increase in military spending by Russia, especially in the context of global economic challenges and reduced funding for essential domestic sectors, raises questions about the potential impacts on the country’s long-term economic health and social welfare. It also signals Russia’s ongoing focus on its military capabilities amidst a period of extended geopolitical tensions and internal challenges.

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Key Highlights from the SIPRI Report:

  1. Optimistic Revenue Increase: Russia’s new budget plans anticipate a 22% nominal increase in government revenues for 2024. This optimistic projection is largely based on expected rises in revenues from oil and gas, alongside other economic activities.
  2. Vulnerability to External Factors: The revenue forecast, however, appears susceptible to various external risks, including tightening international sanctions, a possible downturn in the global economy, or a weaker domestic economic performance.
  3. Strategic Military Spending: The report notes a planned sharp increase in military spending for 2024, followed by reductions in 2025–26. According to SIPRI Director Dan Smith, this could signal President Putin’s intent to conclude the ongoing war within the next year. However, Smith also points out the uncertainty of significant military breakthroughs in Ukraine for either side.
  4. Economic Calculations: The report suggests that while President Putin may be banking on the West’s support for Ukraine weakening, the West is conversely betting on the war draining Russia’s financial resources. Both assumptions carry elements of unpredictability and risk.
  5. Declining Transparency: A notable finding of the report is the declining transparency within the Russian federal budget and in the reporting of actual spending during the year.
  6. War-Related Expenditures Beyond Military: The report emphasizes that war-related spending extends beyond military expenses. It includes costs for integrating occupied territories in Ukraine and rebuilding war-damaged structures within Russia.
  7. Relief for Arms Producers: Part of the increased military spending could be aimed at alleviating debts accumulated by Russian arms producers.

Source: SIPRI

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