Russian government spending is becoming increasingly focused on the costs of its war on Ukraine. The state’s proposed 2024 budget envisages an approximate 68% increase in planned defense spending compared to that allotted for 2023 – this puts defense spending for 2024 at around 6% of GDP. In contrast, education and healthcare spending will be frozen at the 2023 allocation, which amounts to a real term spending cut due to inflation, the UK Defense Intelligence reports.
More spending will need to be allocated to fund payments and healthcare costs for the mounting numbers of wounded soldiers and the families of those killed in the war. More than half of those soldiers wounded severely enough to require longer term medical care have lost limbs, with one in five requiring upper limb amputations, Deputy Labour Minister Alexei Vovchenko stated on October 17, 2023. These injured soldiers will almost certainly require lifelong healthcare.
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Consistently heightened military spending will highly likely contribute to inflationary pressures within russia. Furthermore, continued increases in military spending would force the russian government to make difficult decisions about how to fund the war, likely increasing financial pressures on russian businesses. However, any substantial future reduction in military expenditure would likely remove an increasingly central driver of russian economic activity in the face of sanctions.
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