Russia to Sharply Increase War Spending and Cut Social Programs

Russia has released a new government budget plan that would spend more than $200 billion on its military in 2027. To pay for the war in Ukraine, the Russian government plans to cut money for health care, education, and families. It also plans to raise taxes and borrow more money. The plan was made public on Wednesday and shows that President Vladimir Putin does not intend to stop fighting anytime soon.

The war between Russia and Ukraine has been going on for nearly five years. Both countries are fighting hard on the battlefield, but they are also trying to damage each other's economies. An economy is the system a country uses to make, spend, and manage money. Both sides are finding it harder and harder to keep paying for the war.

Ukraine has attacked Russian oil facilities, which caused long lines at gas stations in Russia. These attacks reduced how much oil Russia could produce and sell. Because of this, Russia missed out on extra money it could have earned when oil prices rose due to a separate conflict in Iran. Ukraine has also attacked large Russian online shopping companies, making it hard for people to get goods they ordered.

Russia has also been hitting targets inside Ukraine. Ukrainian officials say Russia is waging what they call 'total war,' meaning Russia is attacking not just soldiers but also ports, food warehouses, medicine storage buildings, and internet data centers. Cities like Kyiv, Ukraine's capital, have been hit by frequent air raids. These attacks have slowed down Ukraine's economy and made daily life very difficult.

Despite these challenges, Putin spoke with confidence at a meeting of Russia's Parliament on Wednesday. He said Russia would not go around 'begging for handouts' from other countries the way he implied Ukraine does. He claimed Russia's economy was doing well. However, the numbers in the new budget tell a different story.

Just one year ago, Russia expected to slowly reduce military spending in 2026 and 2027. But the war kept growing instead of ending, so those plans changed. Now, the budget shows that military spending will go up by more than 25 percent compared to last year's plan. Military spending will make up more than one-third of all the money the Russian government plans to spend next year.

To help pay for the military, Russia will cut money for social programs. Social programs are government services that help people, like payments to families with children and medical care for the sick. Family and child allowances will be cut by 7 percent, education spending will be cut by 6 percent, and health care spending will be cut by nearly 7 percent.

Russia will also borrow a lot more money. The budget shows that Russia's deficit — the gap between what it spends and what it earns — will be more than $60 billion next year. Russia has to borrow mostly from its own banks because Western countries placed sanctions on Russia, which are rules that block Russia from doing business with many nations. Next year, the cost of paying back that debt will be greater than what Russia spends on health care, education, and housing all together.

To bring in more money, Russia is also raising taxes. The government has already raised taxes on businesses and sales of goods, and now plans to raise taxes on bank savings, profits paid to investors, and property sales. These new taxes are expected to bring in about $4.6 billion more. The government has also proposed a new tax on mining companies.

Ukraine's money problems may be even worse than Russia's. Ukraine's Prime Minister said the government has entered a 'mode of maximum austerity,' meaning it is cutting all spending that is not absolutely necessary. He also said Ukraine faces a $27 billion gap in its defense budget this year alone. The European Union gave Ukraine a loan of more than $100 billion earlier this year, but Ukraine says it still needs more money to keep fighting.