Reuters: Russia doubles defense spending for 2023 to over $100 bln as war costs escalate
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Russia has dramatically increased its defense spending target for 2023, allocating more than $100 billion, a third of government spending, Reuters reports, citing a Russian government document.
In the first half of 2023 alone, Russia spent 12%, or 600 billion rubles, on defense, more than the more than 4.98 trillion rubles ($54 billion) it planned for 2023, according to the agency.
Russian defense spending in the year's first half amounted to 5.59 trillion rubles, i.e., 37.3% of the 14.97 trillion rubles spent during this period. At the same time, Russia's budget plan envisages spending on national defense at 17.1% of the total. Reuters reports that increased defense spending can increase Russia's budget deficit.
"Higher spending on defense, as Moscow prosecutes what it calls a 'special military operation' in Ukraine, could widen the deficit further, while the boost in output could cannibalize other sectors and crowd out private investment," Reuters argues. "Reuters calculations based on the document showed that Russia had spent 19.2% on defense in the first six months of all initially planned budget expenditure for 2023 as a whole."
Between 2011 and 2022, Russia spent a minimum of 13.9% and a maximum of 23% of its budget on defense. Russia has already spent 57.4% of its new annual defense budget, the document showed.
Analysts credit the strong recovery in Russia's industrial output to the surge in military production, highlighting state defense contracts as a primary factor in the country's economic rebound. This has contributed to the growth of Russia's GDP, which has transitioned from a 2.1% contraction in 2022 to positive growth this year.
Specific defense funding falls under classified expenditures, but certain data, although not publicly disclosed, is shared among specific circles. As an example, the document reveals that Russia allocated nearly 1 trillion roubles for military salaries in the first half of the year, surpassing the expenditure by 543 billion roubles compared to the same period in the previous year. Deputy Prime Minister Denis Manturov stated in July that the defense industry had achieved a significant milestone by producing more munitions monthly than it did in the entirety of 2022.
"Funding for schools, hospitals, and roads was already being squeezed this year in favor of defense and security, but as the share of defense spending grows, other areas could face cuts," Reuters reports.
