Russia’s proposed 2027 budget shows that new taxes on commodity producers would cover only a fraction of the government’s planned increase in military spending, leaving higher borrowing to absorb much of the fiscal pressure.
Government documents reviewed by Reuters put 2027 defence spending at 17.1 trillion rubles ($202.6 billion), up 27% from the 13.5 trillion rubles previously budgeted. The 3.6 trillion-ruble increase alone is 18 times the roughly 200 billion rubles in annual revenue that the documents project from a new tax on metals and mining companies.
The financing pressure is already visible in 2026. Reuters reported that the documents raise this year’s federal deficit estimate to 3.2% of GDP from 1.6%, while total spending is now expected to rise 13.2% to 48.6 trillion rubles. Moscow also cut its 2026 oil and gas revenue forecast to 7.6 trillion rubles from 8.9 trillion rubles.
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The deficit estimate is slightly above the roughly 3% level Finance Minister Anton Siluanov gave publicly on September 21. At the time, Siluanov said higher expenditures had emerged during budget execution and that the government would increase borrowing to cover them.
Russia now plans to increase net borrowing in 2026 by 26% to 5 trillion rubles and use another 459 billion rublesfrom the liquid portion of its National Wealth Fund. The planned withdrawal represents about 11% of the fund’s liquid assets, according to Reuters.
Borrowing accelerates further in 2027. Total borrowing is projected to rise 43% to 7.7 trillion rubles, while state debt is expected to reach 21.7% of GDP, up from 19.9% in 2026. This would push debt above the 20% level Russian authorities have previously characterized as economically safe.
The broader draft budget approved by the government calls for 48.8 trillion rubles in spending against 43.3 trillion rubles in revenue in 2027, producing a deficit equal to 2.2% of GDP. The government is expected to submit the package to parliament by October 1.
The tax package is one component of that financing plan. The Finance Ministry has proposed a 30% tax on additional revenue generated by higher global prices for certain non-ferrous metals, fertilizers, and other solid minerals, with a 20% rate for gold producers.
