Moscow froze non-military spending after a $28bn wartime shortfall forced the finance ministry to lean on oil and gas revenues. The Financial Times reported on May 29, 2026, that the ministry in February asked the cabinet to halt other planned outlays as military costs mounted. The ministry told Interfax that the federal budget for 2024 was executed with a deficit of 3.485 trillion rubles, equal to 1.7 percent of GDP, and said extra oil and gas receipts had been used to fund higher end-of-year spending and to pay advances on 2025 obligations. That reliance on energy income tightens Moscow's policy choices as military bills rise.

The finance ministry's request to freeze other spending in February signalled strain on Russia's public finances as military costs mounted.

Budget squeeze

The Financial Times report lays out a simple arithmetic: the war has become a material pressure on public accounts. According to the FT, Russia overspent by $28bn on the campaign in Ukraine, a gap large enough that officials moved to halt other planned outlays. The ministry then told Interfax that, on its accounting, the federal budget for 2024 ran a deficit of 3.485 trillion rubles, or 1.7 percent of gross domestic product.

The ministry said the increase in end of year spending had been met with extra oil and gas revenues, and that some of those receipts were already earmarked to pay advances on 2025 expenses, again in comments carried by Interfax. Strip out oil and gas, and the ministry's figures imply a far wider gap: a deficit of roughly 7.3 percent of GDP by its accounting. That dichotomy underlines how dependent Moscow's fiscal position has become on energy income.

Newsweek cited the ministry's headline numbers for 2024, reporting total revenues of 36.71 trillion rubles against total expenditures of about 40.19 trillion rubles. The resulting three trillion plus ruble deficit was the third consecutive annual shortfall, even as headline public debt remained, by some measures, lower than many European peers. Analysts say, however, that exposure to swings in energy prices and the need to bankroll large military outlays have tightened Moscow's policy options.

Mastheads

Military costs and material losses

The fiscal picture is matched by a steep rise in defence appropriations. United24media's compilation shows Russian defence budget allocations rising from $86.4bn in 2022 to $109.5bn in 2023, and to about $112bn in 2024, with a projection for 2025 of $142bn.

Those numbers reflect higher recruitment payments, one-off enlistment incentives, and growing compensation obligations.

United24media also reproduced an estimate from US Defense Secretary Lloyd Austin, who on December 7 said Russia had spent more than $200bn since the start of the full-scale invasion and had suffered at least 700,000 casualties, calling the campaign "Putin's folly." The same outlet cited Ukrainian financial modelling that placed the value of destroyed Russian military equipment at more than $79bn. Taken together, the sums for materiel losses and rising personnel costs represent a material drain on the national budget.

The combination of a heavier defence budget and volatile hydrocarbon receipts creates a policy bind for Moscow. Extra oil and gas income plugged immediate holes in 2024, the ministry told Interfax, but it did so at the cost of substituting volatile commodity windfalls for sustainable fiscal adjustments. In practical terms, that makes the budget more sensitive to oil and gas price movements and limits room to reprioritise spending without either further cuts or higher borrowing.

That dynamic helps explain the ministry's decision to ask the cabinet for a freeze. Freezing non-military outlays is a blunt instrument, but it preserves cash for near-term military commitments and for advances on obligations in the coming year. It also sends a policy signal: Moscow will prioritise current operational costs over other public programmes while the conflict continues to absorb resources.

The numbers also sharpen the human and material cost implicit in the headline figures. Higher pay and recruitment incentives, substantial death and injury payouts, and the cost of replacing or writing off destroyed equipment now form a noticeable share of defence spending, United24media reported. Those items are recurring or semi-recurring, meaning they're unlikely to disappear quickly even if combat intensity ebbs.

For outside observers, the most important datum isn't debt-to-GDP but fiscal flexibility: the Russian budget can absorb higher headline spending only so long as energy markets cooperate. When they do not, the options are limited to cuts elsewhere, higher borrowing, or further fiscal reallocation to defence.

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For 2025, defence appropriations are projected at $142bn, a sum likely to shape Moscow's spending choices next year.

This article was created with AI assistance.