Global Economy — 2026-06-16

Russia Pours 46 Percent of Budget Into Military in Early 2026 as Revenue Falls and Regions Face Record Shortfalls

BLUFMoscow's war economy has very likely locked military spending above 40 percent of federal outlays through at least mid-2026, overrunning its own fiscal projections by a widening margin.

Janis Kluge of the SWP, drawing on Russian Finance Ministry data, assessed on June 12 that first-quarter 2026 military spending reached 5.9 trillion rubles, equal to 46% of all federal budget outlays and 30% above the first quarter of 2025 1234. The increase was concentrated in classified expenditures, which rose 43% year-on-year to 4.9 trillion rubles and comprised 38.2% of total federal spending, the highest classified share in available budget statistics 13. Federal revenues in the same period totaled only 8.3 trillion rubles, meaning military outlays consumed roughly two-thirds of budget income despite the 2026 budget law projecting defense spending would fall from 7.8% to 6.2% of GDP 13. Kluge flagged that part of the first-quarter surge may reflect Finance Ministry accounting shifts from late 2025, with a clearer picture available after second-quarter budget data publishes in August or September 13.

Analysis
Russia is very likely to register at least 40 percent of federal outlays in military spending when Q2 2026 Finance Ministry data publishes in August or September. At 46 percent, Q1 exceeds that floor by 6 points, a margin seasonal moderation cannot erase. Classified expenditures at a record 38.2 percent of all federal spending reflect structural procurement commitments that do not reset quarterly. Moderate confidence rests on direct Finance Ministry data assessed by a credibly placed institutional analyst, with all corroborating outlets tracing to a single analysis. Finance Ministry accounting shifts from Q4 2025 may have overstated Q1 classified outlays, setting up a Q2 correction below 40 percent. If the pace holds, Western finance ministries must extend attrition timelines and revise sanctions modeling toward a longer-duration war economy.

4 sources

Russian military spending surges by 30% in early 2026, raising doubts about budget plans - Russianomics (Janis Kluge / SWP)
Russia poured 46% of its budget into the military in early 2026 even as revenue fell — ISW - Euromaidan Press
Russia Spent Nearly Every Second Budget Ruble on War in Early 2026, Analysis Finds - United24 Media
Russia's war costs reach new record as Kremlin boosts military spending - RBC-Ukraine