Putin May Not Have The Money Put Into The 2026 Plan

The Russian budget is bursting at the seams.

Russia's budget next year is unlikely to turn out the way it was submitted to the Duma. It has been amended twice this year due to falling revenues, and history may repeat itself in 2026, writes The Moscow Times.

"We believe that in June 2026 the budget will be significantly adjusted as a result of more realistic amendments, as was done in 2025. Parliament will approve the amendments," said the presentation by Professor of the Higher School of Economics, chief researcher of INP RAS Mstislav Afanasyev and Professor of the Plekhanov Russian Economic University. Plekhanov Natalia Shash for the "Big Discussion" on next year's financial plan, "the most complex budget of the [military] five-year plan."

The draft budget is presented on the basis of a "highly optimistic" macroeconomic scenario, Afanasyev and Shash note. "Particular topics are: forecast of business activity of private business, dynamics of public and private investments next year," they continue. - Estimates of the inflation rate, as well as GDP growth, both quantitatively and qualitatively, are debatable."

But on the basis of the favorable forecast, the main characteristics of the budget look "quite attractive and positive, including in comparison with the current year." Central Bank Governor Elvira Nabiullina has already praised the government, calling the 2026 budget "disinflationary."

The budget looks balanced: spending will certainly increase - but not as much as it grew in the first four years of the war. From 24.8 trillion rubles in 2021, they soared to 40.2 trillion rubles last year and 42.8 trillion this year, according to the latest amendments. In 2026, the government plans to spend 44.1 trillion rubles, an increase less than inflation (by 3% to this year's projections). It could hardly be otherwise. INP RAS noted the impossibility of a significant increase in budget expenditures of a civilian nature.

Reality is unlikely to be so beautiful. In recent years, the final expenditures have exceeded the plan, which the Ministry of Finance explains by anticipatory financing in December of part of the next year's expenditures. Now history may repeat itself. Economist Egor Susin still expects this year's deficit to be "slightly higher than the plan."

"The problem of revenues remains a significant irritant," Afanasyev and Shash note. In this regard, taxation increases, primarily on individuals: VAT is being raised from 20% to 22%, some personal income tax rates are rising, rates of state duties and fines are increasing, etc., they list. Expenditures, on the other hand, "predictably continue to increase."

Therefore, the issue of the budget deficit remains highly relevant for fiscal 2026, the economists conclude. It is planned at the level of 3.8 trillion rubles, or 1.6% of GDP. The sources of its coverage are very limited, Afanasyeva and Shash state: "The logical and effective increase in the state debt in this situation is constrained by the high rate of borrowing in the domestic market and the actual and/or legal closedness of foreign markets."

The only remaining option is the sale of nationalized or repossessed property, as well as the sale of precious metals and precious stones from the Gokhran, they argue, but the funds here are not comparable to the task at hand. The government has not budgeted revenues from the sale of confiscated property until 2028.

Another important source of plugging the budget "hole" is the National Welfare Fund (NWF). As of the end of September, it contained about 4.2 trillion rubles. The budget does not envisage spending of the NWF, but Afanasyev and Shash believe that there will be at least attempts to do so. "There will be a discussion around the use of this Fund throughout 2026," the presentation says. - A significant (up to leveling) depletion of its funds cannot be ruled out."

The economists do not indicate another possible source of deficit financing: part of it, apparently, is supposed to be closed at the expense of balances in the accounts of the Federal Treasury. Budget revenues from their placement are expected to be reduced from 1.12 trillion rubles in 2025 to 684.7 billion in 2026. The explanatory note to the draft budget explains this, among other things, by "expected changes in interest rates and the volume of the balance on the single account of the federal budget."

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