Russian military spending surges by 30% in early 2026, raising doubts about budget plans
With classified expenditures at a record high, nearly half of all federal budget spending went to the military in Q1 2026.
In recent months, Russia’s Finance Ministry has sounded increasingly alarmed about the federal budget and the costs of the war. A deeper look at budget spending in the first quarter reveals why: Russian military spending continues at an unprecedented pace and reached 5.9 trillion rubles in Q1 2026. That is 30% more than in Q1 2025, when military expenditure was 4.5 trillion rubles.
The increase was mostly driven by higher classified spending, which increased by 43% from Q1 2025 (from 3.4 trillion to 4.9 trillion rubles). Total federal spending in Q1 was 12.8 trillion rubles, meaning that an unprecedented 38.2% of all federal budget expenditure was classified. Based on Russia’s 2026 budget law, an estimated 85% of classified expenditure goes to the military.
The enormous increase in military spending is particularly noteworthy because Russia had originally planned to rein in the costs of the war this year. According to the budget law, military expenditure was supposed to shrink to 6.2% of GDP in 2026, down from 7.8%1 of GDP in 2025. However, in Q1 alone it already accounted for 2.5% of Russia’s expected full-year GDP.
Q1 military spending amounted to 12% of estimated nominal GDP for the quarter (Rosstat has not published nominal GDP yet, but InVEB estimates it to be 48.4 trillion rubles). This is probably not where military expenditure will be at the end of the year, because it usually moderates in Q2 / Q3, but it is still a remarkably high result. If spending in the first quarter is any indication of the rest of the year, military spending of 9-10% of GDP could be realistic in 2026 (however, there is a caveat → see “The other explanation” below).
Military spending was 46% of total budget spending in Q1, meaning that almost every second ruble spent from the federal budget ended up with the military. But the pace of Russian military spending looks even more impressive (and from the Kremlin’s perspective: concerning) when compared with budget revenues. New oil sanctions, the strong ruble and the cooling economy resulted in tax revenues of only 8.3 trillion rubles in Q1. This means that military spending was equivalent to two-thirds of Russian budget revenues in January-March 2026. Of course, the US/Israel/Iran war and the closure of the Strait of Hormuz will boost revenues this year, but the effect will most likely be rather limited and only temporary, and nowhere near the additional 3% of GDP that Russia would need if military spending actually reaches 9% of GDP.
The other explanation: accounting acrobatics
Looking at expenditure in Q1, the clear message seems to be that military spending will be much higher this year than last year. But it is also possible that the Finance Ministry shifted military spending from 2025 into this year to not exceed last year’s deficit plans. I have written about this previously, and there are several parameters that make it likely:
In September-November 2025, Russian federal budget spending was consistently ahead of the planned trajectory. Back then, I estimated that the budget deficit would be almost 1% of GDP higher than planned (3.5% of GDP instead of 2.6%).
In the end, the federal budget deficit came in exactly as planned, but a few things were conspicuous: December expenditures from the federal budget were surprisingly low (the share of annual spending that happened in December was much smaller than the historical norm).
Detailed spending data for Q4 2025 later revealed that there was surprisingly little classified spending late in the year, making it likely that classified spending was moved into 2026. This would result in ballooning classified spending in Q1.
If some of the increase in military spending in Q1 2026 was actually caused by accounting acrobatics of the Finance Ministry, this would mean that the underlying pace of spending in 2026 is not quite as high as the Q1 data suggests.
Of course, it is also possible that Russia frontloaded its classified spending (pre-payments for arms procurement contracts) even more than in recent years, which would then lead to lower military spending in the rest of 2026. When the detailed budget data for Q2 is published in August/September, it should become clearer which explanation is correct.
Planned military expenditure in 2025 was 7.1% of GDP - actual expenditure was 7.8% of GDP.
Strong analysis—and credit for flagging the accounting caveat instead of just running with the 30%. That caveat is exactly why the revenue side is the firmer signal: spending can be shifted between years, but the receipts can't. Only 8.3 trillion rubles in tax revenue in Q1, held down by the strong ruble and oil sanctions—and any relief from higher oil prices looks temporary.
More superb research.