Russian defence spending set to fall slightly in 2026, draft budget shows

By Darya Korsunskaya

LONDON (Reuters) -Russia's state spending on national defence is set to fall slightly in 2026, according to draft budget materials submitted to parliament, but sources said it could be increased if needed.

The documents show planned defence spending of 13 trillion roubles ($157 billion) in 2026, which would be the fifth year of the war in Ukraine.

That is more than the 12.6 trillion roubles noted in preliminary Finance Ministry documents obtained by Reuters last week, but below this year's post-Soviet high of 13.5 trillion roubles.

The lower target has raised questions among analysts, given that there is no sign of an end to the conflict. How the money will actually be spent is unclear, because 84% of defence expenditure is classified.

A source with knowledge of the budget process told Reuters that defence spending can be increased rapidly if necessary.

"If there is active warfare, they can add funding at any moment," said the source, who spoke on condition of anonymity because of the sensitivity of the subject.

Another source said actual military spending often exceeds targets and may be hidden within other types of expenditure.

Actual military spending in 2025 is classified, but published materials show some increases compared to the initial plan, including 30 billion roubles in additional capital for PSB, a bank serving the military-industrial complex.

Combined with national security spending, which includes financing for police and security agencies, total spending for defence and security-related items in the draft 2026 budget amounts to 16.8 trillion roubles, almost on a par with this year's figure of 17 trillion.

The share of defence and security spending is set to fall to 38% of total budget expenditure from a record 41% last year. It will amount to about 7% of gross domestic product.

The Finance Ministry proposed raising the rate of value-added tax (VAT) last week to 22% from 20% in 2026 to fund military spending and help curb the budget deficit. Parliament will begin reviewing the budget on October 22.

($1 = 82.8705 roubles)

(Editing by Mark Trevelyan)