The Kremlin is mortgaging Russia's economy to fund its war of aggression against Ukraine. Government budget documents reviewed by Reuters show that Moscow plans to spend 17.1 trillion roubles — roughly $202.6 billion — on defence in 2027, about 27 percent more than the 13.5 trillion roubles originally budgeted and the highest figure since the start of the full-scale invasion in 2022. Total defence spending is projected at 50 trillion roubles over the next three years. The draft budget is expected to be submitted to parliament by October 1.
The numbers confirm what Ukraine has been warning for months: Vladimir Putin has no intention of ending the war. He intends to grow it.
A war economy stretched to its limits
The documents paint a picture of an economy being consumed by the war machine. Moscow has raised its estimate for the 2026 budget deficit to 3.2 percent of GDP, double the 1.6 percent previously projected. Overall budget spending in 2026 will climb 13.2 percent to 48.6 trillion roubles — nearly 21 percent of GDP.
The war is being paid for with debt and taxes. Russia plans to increase net borrowing by 26 percent to 5 trillion roubles in 2026, while draining 459 billion roubles — about 11 percent of the liquid portion of its National Wealth Fund — to plug the deficit. State debt is set to reach 21.7 percent of GDP in 2027, breaching the 20 percent threshold the authorities themselves consider safe. Total borrowing in 2027 will jump 43 percent to 7.7 trillion roubles.
Oil and gas revenues — the backbone of the Russian state — are shrinking under the weight of Western sanctions and Ukraine's relentless drone strikes on refineries. The government has cut its 2026 oil and gas revenue estimate to 7.6 trillion roubles from 8.9 trillion previously. To compensate, Moscow announced new tax hikes for 2027, including a windfall tax on metals and mining companies expected to raise about 200 billion roubles a year, and a rise in the dividend tax for investors from "unfriendly" countries from 15 to 35 percent.
More men, more money, no peace
The budget surge is matched by a manpower surge. Putin has issued a decree expanding Russia's active military forces by 15,500 servicemen to 1.55 million personnel, bringing total armed forces to approximately 2.44 million — a staggering figure for a country that cannot replace its battlefield losses without extraordinary measures.
President Volodymyr Zelensky has said a new wave of mobilization is already underway, with preparations tracked by Ukrainian military intelligence for months, alongside the arrival of thousands more North Korean troops. The Kremlin, for its part, dismissed mobilization talk as "nonsense" — a denial that fooled nobody after Russia's chaotic 2022 mobilization.
Analysts at the Institute for the Study of War assess that Russia's campaign of mass drone attacks on Ukrainian cities has a single goal: breaking Ukraine's will and forcing its capitulation by spring 2027. Until that plan plays out, Putin is unlikely to soften his demands or enter serious ceasefire talks — a verdict that exposes the emptiness of Moscow's diplomatic posturing.
Ukraine pays the price of Putin's war
The human and economic cost of Putin's decision to escalate falls overwhelmingly on Ukraine. The war is costing Ukraine an estimated $155 billion a year. With Western aid arriving late, Kyiv has frozen everything but army salaries, pensions, and public wages — parks, fountains, and road repairs have all been sacrificed to keep the state and its defence functioning.
That is the real meaning of the 17.1 trillion roubles: a regime willing to bankrupt its own country rather than stop trying to destroy its neighbour. Every extra rouble Putin spends on bombs and soldiers is a rouble not spent on Russian schools, hospitals, or roads — and further proof that only sustained military and economic pressure, not wishful diplomacy, can end this war.
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