Russian budget shifts raise questions about new tax burden ahead
Russian government plans major changes to its 2025 budget with focus on defense spending and new tax measures. Economic experts point to upcoming financial challenges as oil prices expected to drop
In a major shift of state priorities‚ Russias 2025 budget puts an un-precedented 6.3% of GDP towards military needs (which is about one-third of all spending)‚ making it the biggest defense-focused budget since cold-war times
The economy shows mixed signals with interest rates hitting a 20-yr high and the rouble at its lowest point versus dollar in about a year. Western restrictions blocked most international funding which leaves Moscow with limited money-raising options
The government already started working on getting more money through taxes - new reforms should bring in extra 1.7% of GDP by early-25. However experts like Alexei Klimyuk from Alfa Wealth think its not enough: “Many new tax law changes will come in 2025“
Oil price changes create more budget problems. Natalia Orlova‚ chief economist at Alfa-Bank notes that with prices going down from $70 to $65.5 per barrel between 24-27; the country needs to find new money sources
To support military spending the government makes cuts in other areas:
- Small business support down 11.6%
- Education program funding cut by 11%
- Regional social benefits reduced by 31%
- Social services update program decreased by 35%
Vladimir Kolychev (deputy finance minister) points out that while military costs went up by 3-3.5% of GDP other spending actually went down by 1-1.5% showing clear priority shifts
The budget has never been so fiscally focused on extracting revenues from every possible source as it has been recently
