Russia has doubled its defense spending goals amid surging costs in the war effort against Ukraine, Reuters reported on Thursday.
Russia’s defense spending target is now more than $100 billion for 2023, roughly $46 billion more than the initial budget plan, according to documents obtained by Reuters. The country’s defense industry is now producing more munitions every month than it did for the entire 2022 year, as the conflict with Ukraine continues to escalate.
Russia already spent more than its initial yearly defense budget by 12% – roughly $6.3 billion – in the first half of 2023, according to Reuters. The country planned to utilize 17.1% of its approximate $300 billion total yearly spending budget on defense, but that number crossed 19% within the first six months of the year.
In response, Russia is extending its defense spending target to $100 billion for 2023, one-third of the country’s total annual budget and the highest share in a decade, according to Reuters. Russia typically ends the year with a budget surplus, but is on track to have a budget deficit for the second year in a row.
BREAKING:
Ukraine has attacked Russia’s biggest port in the northern Caucasus, Novorossiysk, with naval and aerial drones overnight.
The Black Sea is becoming smaller and smaller for Russia.pic.twitter.com/0rvLbio1qF
— Visegrád 24 (@visegrad24) August 4, 2023
Russia’s military production has increased industrial output and provided a critical boost to the country’s GDP growth, according to Reuters. But as the military-industrial complex increases spending and production, other industries such as infrastructure, schools and hospitals could begin to see less funding. (RELATED: Russia Plans On Buying Millions Of Artillery Shells From North Korea: REPORT)
“We don’t know what the potential for a further increase in the output of tanks and missiles is,” CentroCreditBank economist Yevgeny Surorov said on his MMI Telegram channel, Reuters reported. “But we know that increasing this output even further is possible only at the expense of haemorrhaging more staff from other sectors of the economy.”
The Bank of Russia predicted GDP growth by a factor of 1.5%-2.5% for the year, according to Reuters. Borrowing rates have been hiked to 8.5% as inflation concerns continue to grow.
“The military industrial complex is enabling industrial growth, ‘civilian’ industries are slowing down again,” said Dmitry Polevoy, head of investment at Locko-Invest, according to Reuters. “Abundant fiscal ‘steroids’ are helping fairly well for now, but are hardly improving the economy’s medium- or long-term position. As soon as fiscal consolidation becomes unavoidable, there will be a rapid economic slowdown.”
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