Reuters: Russia to raise taxes, cut civilian spending under pressure from war

Russia is preparing to raise taxes and cut civilian spending to keep defense spending at a record high as the country's economy cracks under the weight of more than three years of war in Ukraine. About writes Reuters, citing informed sources.

The agency writes that the Russian dictator Vladimir Putin denies that the war is having a negative impact on the Russian economy, but the country's budget deficit has already risen to 4.9 trillion rubles ($61 billion).

Economists warn of the risk of recession. Since the start of the full-scale war in 2022, Russian budget expenditures have almost doubled, causing inflation and record interest rates.

In 2025, Russia plans to spend 17 trillion rubles on defense and security, which is 41% of all expenditures and the highest level since the Cold War.

Despite Putin's statements about possible cuts in military spending, Russian officials recognize that it will only have to increase in the coming years.

According to Anatoly Artamonov, chairman of the Russian Budget Committee, in order to maintain the army, Russia will have to cut other expenses by 2 trillion rubles annually until 2028. Education, healthcare, and social programs may be under attack.

Former Deputy Governor of the Central Bank of the Russian Federation Sergey Aleksashenko predicts that the government will raise taxes and reduce social benefits, indexing them below the inflation rate (6-7% this year).

The agency's interlocutors expect the Russian budget deficit to reach at least 5 trillion rubles this year, and possibly 8 trillion rubles.

• August 14, Bloomberg wrote about Putin's dilemma both war and truce pose risks to the economy.