Russia's 2026 budget deficit to nearly double its target

In monetary terms, analysts at Gazprombank estimate the shortfall at about 6.9 trillion rubles — almost twice the original plan of 3.8 trillion.

Siluanov attributed the wider deficit to additional spending needs that arose during budget execution. He named leftover funds and entering the borrowing market within limits that would ensure a stable position for the financial market as the sources of financing. The overall volume of borrowing, he said, will be somewhat exceeded.

It is the second upward revision of the deficit forecast since the start of the year. In late summer the plan rose to 5.1 trillion rubles, but even that could not be met — by the end of August the deficit had reached 5.8 trillion rubles, 1.5 times the figure for the same dates a year earlier.

According to Janis Kluge, an expert at the German Institute for International and Security Affairs, Russia's fiscal situation is deteriorating rapidly because of growing war spending. In the first half of the year the budget spent 10.7 trillion rubles on the army and weapons purchases — a third more than a year earlier. Military spending, by Kluge's calculations, accounted for 43.8% of all budget expenditures and 57.3% of all taxes received.

Analysts note that the unplanned growth in military spending is undermining the idea of fiscal consolidation on which this year's budget was built. To reduce the deficit, the government raised the VAT rate for the second time in eight years and launched a tax reform for small business, stripping hundreds of thousands of entrepreneurs of the simplified system.

For 2027, the Finance Ministry is penciling in a reduction of the deficit to 2% of GDP, or roughly 5 trillion rubles. According to Siluanov, the cut-off price of the budget rule will be lowered to $50 per barrel, which, by the estimate of Alexander Abramov of RANEPA, means a reduction in spending of 1.2 trillion rubles. Analysts at Sberbank's Center for Macroeconomic Research predict that next year the government will again exceed its budget deficit plan — by 1.6 trillion rubles.