The Russia–Ukraine War has entered its fifth year with few signs that it will come to an end. Russia’s federal budget funding of the war and other military spending reached about 16 trillion roubles in 2025, or 7.5 per cent of gross domestic product (GDP). However, the real-terms growth of military spending moderated, from 38 per cent in 2024 to 6.1 per cent in 2025.

In an attempt to restore balance to an economy overheated by increased spending on the war, in 2025 the government implemented a tough monetary policy to reduce the rate of inflation. Yet, budgetary pressures mounted, with an end-of-year deficit of 2.6 per cent GDP.

In these circumstances, the Ministry of Defence has adopted more stringent financial management methods and has made savings on purchases of armament. This has led to a reduction of planned military expenditure in the 2026 budget to 14.9 trillion roubles, or 6.3 per cent of GDP. However, the annual budget will probably be amended, as it was twice in 2025. With the Iran war, launched by Israel and the United States in early 2026, this has become even more likely, as higher oil prices should greatly ease Russia’s budget situation this year.