Putin says Russia plans to cut military spending from next year

By Gleb Bryanski and Vladimir Soldatkin

MOSCOW (Reuters) -President Vladimir Putin said on Friday that Russia was looking to cut its military expenditure from next year, contrasting that with NATO's plan to ramp up defence spending over the next decade.

NATO allies on Wednesday agreed to raise their collective spending goal to 5% of gross domestic product in the next 10 years, citing what they called the long-term threat posed by Russia and the need to strengthen civil and military resilience.

In his first reaction to that move, Putin told a press conference in Minsk that the NATO spending would go on "purchases from the USA and on supporting their military-industrial complex", and this was NATO's business, not Russia's.

"But now here is the most important thing. We are planning to reduce defence spending. For us, next year and the year after, over the next three-year period, we are planning for this," he said.

Putin said there was no final agreement yet between the defence, finance and economy ministries, "but overall, everyone is thinking in this direction. And Europe is thinking about how to increase its spending, on the contrary. So who is preparing for some kind of aggressive actions? Us or them?"

Putin's comments are likely to be greeted with extreme scepticism in the West, given that Russia has massively increased defence spending since the start of the Ukraine war.

The conflict shows no sign of ending and has actually intensified in recent weeks, as negotiations have made no visible progress towards a ceasefire or a permanent settlement.

Putin said Russia appreciated efforts by U.S. President Donald Trump to bring an end to the war.

"He recently stated that it turned out to be more difficult than it seemed from the outside. Well, that's true," Putin said.

Trump said this week that he believed Putin wanted to find a way to settle the conflict, but Ukraine and many of its European allies believe the Kremlin leader has no real interest in a peace deal and is intent on capturing more territory.

Putin said Russian and Ukrainian negotiators were in constant contact, and Moscow was ready to return the bodies of 3,000 more Ukrainian soldiers.

ECONOMIC SLOWDOWN

Russia is seeing a sharp slowdown in economic growth as the budget comes under pressure from falling energy revenues and the central bank is trying to bring down inflation.

Russia hiked state spending on national defence by a quarter in 2025 to 6.3% of gross domestic product (GDP), the highest level since the Cold War. Defence spending accounts for 32% of total 2025 federal budget expenditure.

Defence plants have been working round-the-clock for the past several years, and the state has spent heavily on bonuses to attract soldiers to sign up and on compensation for the families of those who are killed.

Putin acknowledged that Russia had paid for the military spending increase with higher inflation.

The finance ministry raised the 2025 budget deficit estimate to 1.7% of gross domestic product in April from 0.5% after reducing its energy revenues forecast by 24%, and it plans to tap into fiscal reserves this year to balance the budget. The next draft budget is due to appear in the autumn.

(Additional reporting by Lucy Papachristou, Maxim Rodionov, Anastasia Teterevleva, Anastasia Lyrchikova and Elena Fabrichnaya; writing by Mark Trevelyan and Gleb Bryanski; Editing by Hugh Lawson)