UK intelligence identifies funds sources for Russia's increased military spending

Photo: Russia will increase military spending through debt and taxes (Getty Images)

Russia’s planned revenue target for 2024 is unlikely to be achieved as envisioned in the budget plan. It may well be that the government will have to consider other policy measures to fund the planned spending, according to the UK Ministry of Defense.

The Russian government has ambitious plans to increase spending by 26% in 2024. This is based on optimistic expectations of a 22% increase in revenues, with oil and gas revenues expected to grow by almost 25%.

However, the Russian government will have to cut its contributions to the National Welfare Fund and increase domestic taxes and debt to finance the planned spending.

“These policies will almost certainly have adverse effects on the economy in the medium to long term by maintaining inflationary pressures or constraining future economic growth. The National Wealth Fund is ostensibly for the long-term economic welfare of the Russian people but is increasingly being used to fund its invasion of Ukraine, with the value of its assets falling 10 per cent in 2023,” the UK Ministry of Defense says.

Record military budget

In 2023, Moscow spent more than $100 billion on military purposes, or almost a third of its total expenditures.

In 2024, the Russian authorities intend to spend almost a third of all expenditures on the maintenance of the army and the military-industrial complex.

For the year, 10.775 trillion rubles ($121 billion at the current exchange rate of the Central Bank of the Russian Federation) will be spent on national defense, which is 70% more than in 2023. Another 3.338 trillion rubles, according to the budget law, will be spent by the government under the “national security” line item, which includes the budgets of the Interior Ministry, Russian Guard, special services, and the FSIN system. Thus, almost 40% of the budget will be spent on law enforcement agencies.