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Russia’s war budget just hit a wall. The Kremlin has imposed sharp spending restrictions after an April liquidity crisis laid bare the spiraling financial toll of its invasion of Ukraine, with the federal deficit for the first four months of 2026 reaching roughly ₽5.9 trillion, or about 2.5% of GDP.
That number is striking for one reason: Russia’s full-year deficit target was ₽3.8 trillion. Moscow blew through it before May even started, marking the steepest fiscal shortfall since the full-scale invasion began in 2022.
The numbers behind the squeeze
Military and security spending now accounts for approximately 40% of Russia’s federal budget, totaling around ₽16.84 trillion.
Finance Minister Anton Siluanov saw this coming. In a February letter to the cabinet, he flagged potential war-related overspending of up to ₽2 trillion, warning that under adverse conditions, the figure could balloon to ₽4 trillion.
His proposed solution: postpone ₽2.9 trillion in planned expenditures that fall outside the military and social safety net categories.
The first quarter alone produced a ₽4.6 trillion deficit, more than double the same period last year. By the time April’s liquidity crunch materialized, the government had little choice but to act.
Reserves running on fumes
Russia’s financial cushion is looking increasingly threadbare. The liquid portion of the National Wealth Fund had declined to approximately ₽3.4 to ₽3.9 trillion by early April.
Economic Development Minister Maxim Reshetnikov didn’t mince words on April 17, stating that Russia’s economic reserves were “largely exhausted.”
Central bank interest rates have hovered between 14% and 21% during early 2026, levels that choke off lending and investment across nearly every sector outside defense. Persistent labor shortages, partly driven by wartime mobilization pulling workers out of the civilian economy, compound the problem.
Temporary boosts in oil revenue, partly triggered by geopolitical tensions in the Middle East, offered some relief but failed to address the underlying structural issues.
What the cuts look like
The government has begun discussions about potential 10% cuts to what officials describe as “non-sensitive” spending areas. In practice, that means any budget line that isn’t directly tied to prosecuting the war or maintaining basic social payments.
Siluanov’s earlier recommendation to defer ₽2.9 trillion in non-military, non-social spending appears to be the framework Moscow is working from. The logic is straightforward: protect the war effort and pension payments, let everything else absorb the pain.
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