HighIV Macro Policy & Sovereign Debt28 September 2026, Monday
Russia plans its highest defence spending of the war for 2027
According to budget documents seen by Reuters on 28 September, Russia will allocate 17.1 trillion roubles (202.58 billion dollars) to defence in 2027. That is about 27% more than the previously planned 13.5 trillion roubles and the highest level since 2022.
According to the Reuters report cited by The Moscow Times, the documents put total defence spending for 2027–2029 at 50 trillion roubles. Planned defence spending for 2026 is 12.1 trillion roubles, but the actual figure is classified. In the same documents, the government raised its 2026 budget deficit forecast from 1.6% to 3.2% of GDP. Total 2026 spending rises 13.2% to 48.6 trillion roubles, or 20.9% of GDP. The oil and gas revenue forecast was cut from 8.9 trillion to 7.6 trillion roubles.
Deficit financing is shifting towards borrowing. According to the documents, net borrowing in 2026 rises 26% to 5 trillion roubles, and total borrowing in 2027 rises 43% to 7.7 trillion roubles. Public debt is expected to reach 21.7% of GDP in 2027. The government will draw 459 billion roubles from the National Wealth Fund in 2026, about 11% of the fund's liquid assets. A windfall profit tax on mining and metals companies is expected to raise about 200 billion roubles a year. The draft budget is expected to be submitted to the Duma by 1 October.
According to a Kyiv Independent report dated 29 September, Putin signed a decree on 28 September increasing the armed forces' personnel by 15,500. The same report said Ukrainian military intelligence claims Russia plans to mobilise about 300,000 people in each of 2026 and 2027; this claim could not be independently verified.
Talay assessment
Bottom line
The documents show the Kremlin preparing to finance the war at full scale throughout 2027. With oil and gas revenue falling, the deficit doubles and the burden shifts to borrowing, new taxes and the wealth fund. The most likely direction is for the Duma to adopt the draft largely unchanged and for domestic borrowing costs to stay high.
Likely effects
- Russian domestic debt marketNegative1–6 months
A 43% rise in borrowing in 2027 means the Finance Ministry will demand more funds from the domestic market and yields will stay high.
- Ukrainian frontNegative6 months+
A defence budget of 17.1 trillion roubles and higher personnel numbers show Russia's intention to sustain high-tempo operations in 2027 as well.
- Russian corporate profitsNegative1–6 months
An extra tax of 200 billion roubles a year on mining and metals companies could narrow the sector's investment capacity.
- Trade with TürkiyeUncertain1–6 months
The squeeze on the Russian budget and tax increases could worsen demand and payment conditions for Turkish exporters in Russia.
Possibilities, ranked
- 1Draft passes as is60%
The government submits the draft to the Duma by 1 October, and it is adopted with the defence item largely intact.
Watch: Defence and deficit figures in the official draft budget submitted to the Duma
- 2Extra taxes and cuts30%
New tax increases or cuts to civilian spending are added to meet the deficit target.
Watch: Finance Ministry announcement of an additional tax package
- 3Defence item reduced10%
Progress in ceasefire talks or a revenue shock leads to defence spending being cut in the draft.
Watch: Changes to the defence item during Duma readings
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- 2027 defence spending▼ 17.1 trn roubles
- 2026 deficit/GDP▼ 3.2%
- 2027 total borrowing▼ +43%