Ukraine

cross-posted from: https://rss.ponder.cat/post/217472

Russian ruler Vladimir Putin has stated that the Kremlin plans to reduce defence spending, the share of which in the national budget has reached record levels not seen since the Soviet era.

Source: The Moscow Times, an independent Amsterdam-based news outlet

Details: Putin said current military expenditures amount to RUB 13.5 trillion (US$150 billion), with Russia’s GDP standing at RUB 223 trillion (US$2.5 trillion), which equals 6.3% of GDP.

Quote from Putin: "We are planning to reduce defence spending. For next year, and the year after that and so on – for the next three years – we are planning, although there is not yet a final agreement between the Ministry of Defence, the Ministry of Finance and the Ministry of Economic Development, but overall everyone is thinking in that direction."

Details: He stressed that the increase in military spending has led to inflation, which the government continues to battle. Putin said that Russia’s GDP growth this year will slow compared to previous years, when the economy was growing by more than 4% annually.

Putin stated that the slowdown is a deliberate measure to fight inflation. Meanwhile, he mentioned NATO’s plans to raise defence spending to 5% of GDP by 2035.

Other top officials have also pointed to problems in the Russian economy. Russia’s Minister of Economic Development Maxim Reshetnikov stated that the country is already "on the brink" of economic recession. Elvira Nabiullina, Governor of the Central Bank of Russia, warned of depleted resources that had previously supported growth amid warfare and sanctions. She said Russia has run out of spare labour, idle industrial capacity and reserves from the National Wealth Fund, two-thirds of whose liquid assets have already been spent.

Alexander Shokhin, Chairman of the Russian Union of Industrialists and Entrepreneurs, said that many companies are on the verge of default. Alexey Mordashov, the main shareholder of Severstal, which is one of Russia’s largest steel and mining companies, warned of a risk of large-scale bankruptcies due to high interest rates and falling demand. Businessman Arkady Rotenberg noted that businesses are struggling to survive under expensive loans, calling the current situation "not a very good factor for business".

Background:

Russia is gradually exhausting its macroeconomic reserves, in particular the Russian National Wealth Fund (NWF), but its potential to further finance the war remains.Earlier, Russian analysts predicted that the liquid part of the National Wealth Fund could be completely exhausted by early 2026. These estimates were made against the backdrop of falling oil and gas prices.

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