UK intel: Russia proposes 25% defense budget increase, social cuts in 2025

Russia’s proposed 2025 budget includes a 25% increase in defense spending and a 16% reduction in social spending, reflecting the government’s prioritization of military financing, according to the UK Defense Ministry’s Intelligence Update, published on 9 October.

This budget decision is set against the backdrop of rising inflation, which reached 9% in August 2024, and ongoing economic challenges caused by demand exceeding supply.

The Ministry wrote:

• On 30 September 2024, the Russian government submitted draft budget proposals for 2025 to the State Duma. The 2025 budget expects expenditure to grow by 5% (not adjusted by inflation) to 41.5 trillion rubles ($447bn).
• The proposed budget envisages an approximate 25% increase in defence spending in 2025, compared to the announced 2024 budget. Defence spending accounts for 32% of the 2025 budget, up from the pre-war share of 14.5% in 2021. The new budget demonstrates Russia’s continued prioritisation of financing the war over other domestic priorities. For example, social spending is expected to decrease by 16% in 2025.
• Demand continues to outpace supply in the Russian economy and the expanding budget for 2025 is highly likely to worsen this. This will almost certainly add to inflationary pressures which remain a key issue, due to the inflation rate being approximately 9% in August 2024.

According to ISW, despite Russian officials, including Prime Minister Mikhail Mishustin, emphasizing the importance of fulfilling social obligations, the 2025 defense budget is set to rise to $140 billion, consuming 40% of the federal budget.

ISW noted earlier that Russia plans to allocate almost $1 billion for military contract payments from 2025 to 2027, indicating a continued reliance on crypto-mobilization for Ukraine war manpower.

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