On November 15, Russia’s Duma, the country’s equivalent of a parliament, took steps towards approving its most substantial federal budget since the Soviet Union’s disintegration, projecting a staggering 25% surge in spending for 2024, with a predominant focus on defense.
The significance of the proposed budget lies in its historical departure, as defense expenditures are anticipated to surpass social spending ahead of the forthcoming presidential election in March. This robust budget is made possible by Russia’s resilience against sanctions, sustained by revenue from oil exports, despite facing isolation in the West.
Western experts view this move strategically, interpreting it as an effort to address conflicts in Ukraine and prepare for potential military confrontations with the West, characterizing it as a comprehensive remilitarization of Russian society. Richard Connolly, an expert on Russia’s military and economy at the Royal United Services Institute in London, emphasized the scale of this move, stating, “This amounts to the wholesale remilitarization of Russian society.”
The draft budget outlines an expected expenditure of 36.66 trillion rubles (approximately $411 billion) in 2024, projecting a budget deficit of 0.8% of Russia’s Gross Domestic Product (GDP). A significant portion of the budget remains undisclosed, hinting at potential allocations for Moscow’s ongoing military efforts in Ukraine since February 2022.
Independent business journalists Farida Rustamova and Maksim Tovkaylo reported that around 39% of federal spending in 2024 is earmarked for defense and law enforcement. Meanwhile, Russia’s Central Bank, anticipating a 4.5% inflation rate in 2024, has raised key interest rates to 15% to counter inflationary pressures.
Russia’s shift towards a record federal budget underscores a specific emphasis on defense, addressing potential economic challenges that may arise in the long term.
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