Putin Budgets for More War as Russia’s Regions Ready for Less

By Peeter Helme

Wednesday 4 November 2026

Vladimir Putin’s government plans to devote more than a third of federal spending to defence in 2027 while reducing earlier civilian spending commitments and seeking more tax revenue. For Ukraine and its allies, the proposal signals continued financing for Russia’s armed forces. Inside Russia, it will have different consequences: for example, Nizhny Novgorod’s governor has announced a 15% cut in state and municipal staff. And he is not the only one.

The State Duma approved the budget proposal at first reading on 29 October. It provides for expenditure of 48.7 trillion rubles (about €540 billion) and a deficit equivalent to 2.2% of gross domestic product. The budget assumes 4% inflation in 2027.

Duma Speaker Vyacheslav Volodin outlined plans for the second reading on 19 November and the third on 24 November. Approval by the Federation Council and the president’s signature would follow.

The Finance Ministry’s assessment puts 2026 expenditure at 48.5 trillion rubles (€536 billion). Next year’s planned increase is therefore only about 0.4%, meaning total spending will fall after accounting for the assumed inflation rate.

Reuters’s budget analysis puts the 2027 defence allocation at approximately 17 trillion rubles (€189 billion), about 27% above the previously planned amount for that year. Some military expenditure also appears elsewhere in the budget.

Civilian promises revised

Reuters examined the draft and found that federal allocations for 2027 were below the amounts previously planned for that year: social policy by 7%, education by 6% and healthcare by 6.8%. The category covering economic development, including infrastructure and agricultural subsidies, was reduced by 7.4%. Yet, these are revisions to earlier promises, not cuts from this year’s actual expenditure.

Nor do those percentages describe what every pensioner, school or hospital will lose. We should also keep in mind that regional and municipal budgets account for a substantial share of social spending. Meaning that what residents experience depends partly on decisions made closer to home.

As mentioned, in Nizhny Novgorod, an oblast with about 3 million inhabitants on the Volga east of Moscow, Governor Gleb Nikitin announced the planned 15% reduction in state and municipal staff during preliminary budget discussions in October. He said officials had “to make some painful spending cuts.”

Deputy Governor Yegor Polyakov explained in more detail how spending on administration, autonomous nonprofit organisations and the operation of government institutions would fall by more than 10%. Spending on exhibitions and conferences would be almost halved. Yet the region intends to continue building metro stations, an IT campus, a major road, and schools and clinics.

The reductions extend beyond Nizhny Novgorod. Krasnoyarsk Governor Mikhail Kotyukov ordered proposals for a 15% reduction in regional government staffing on 14 October, citing digitalisation and simpler administrative procedures.

In Khabarovsk in the Russian Far East, Governor Dmitry Demeshin announced a 15% reduction on 5 October, alongside ministry mergers.

Taxpayers cover more

The Finance Ministry’s projections show oil and gas receipts falling from 7.6 trillion rubles (€84 billion) in 2026 to 7 trillion rubles (slightly over €77 billion) in 2027. Revenue from other sources is projected to rise by about 8% before inflation, from almost 34 trillion rubles (over €371 billion) to 36.3 trillion rubles (€401 billion). The ministry attributes that increase to growth in taxable activity, improved tax collection and changes in legislation.

As early as September, the government proposed additional tax increases on what it calls excess profits in metals and fertilisers, cross-border online trade, and investment-related personal income. According to the Finance Ministry, the last measure would affect about 4 million people. The proposals extend the search for revenue to savers, online purchases, and major commodity businesses.

Regional authorities must also secure funding to qualify for some form of federal assistance. In Western Siberian oil-producing Khanty-Mansia, Governor Ruslan Kukharuk explained that the region must contribute its own funds to national projects or risk losing federal financing. Maintaining access to Moscow’s support requires local resources, even as officials reconsider less urgent expenditures.

How the budget is sold

Officials continue to present the budget through promises about everyday services. In Pskov, United Russia deputy Alexander Kozlovsky emphasised pensions, healthcare, school repairs and public transport. Local communist legislator Dmitry Mikhailov criticised reliance on levies and debt, while demanding stronger economic support for victory in the war. His objection concerned how to finance Russia’s priorities; he supported the war itself.

The budget suggests that Putin intends to sustain military spending by accepting tighter constraints elsewhere. Lower civilian allocations, additional taxes and regional staff cuts show how the authorities plan to adjust without abandoning the war effort. For Ukraine and its partners, financial pressure on Russia should therefore not be mistaken for an approaching deadline for Russia’s ability to fight.

Inside Russia, the consequences will be uneven. Regional authorities are protecting selected benefits and construction projects while cutting administrative costs. Some governors present reductions as improvements in efficiency. The question for residents is how far those savings can go before they affect the services they receive. Announced staffing cuts establish that adjustment is under way. They do not yet establish its full cost—or how long the government can sustain it.