Putin Rejects Defense Cuts as Russia Faces Budget Crisis

The Russian Ministry of Finance and the Central Bank of the Russian Federation have warned Vladimir Putin that the nation's war economy is becoming unsustainable. The federal budget deficit reached 5.9 trillion rubles in the first four months of 2026, already exceeding the total deficit for 2025. Finance Minister Anton Siluanov projected a budget overrun of at least 2 trillion rubles for 2026, with potential overspending of 4 trillion rubles in 2027 and 2028. These pressures are compounded by a 60% depletion of the National Wellbeing Fund and a slowing economy with GDP growth forecasts cut to 0.4%.

Despite warnings that current spending levels imperil national stability, Putin has rejected cuts to the 16.84 trillion ruble defense budget. He instead instructed the finance ministry to identify savings in public sector jobs, infrastructure projects, and other non-essential areas. The Ministry of Finance has subsequently requested a 10% reduction in non-essential spending, while the government considers windfall taxes on banks and producers to close the fiscal gap.

This internal economic strain coincides with military setbacks. Ukraine retook 282 square kilometers of territory in May 2026 and intensified drone strikes on Russian oil refineries, knocking out one-quarter of refining capacity. In Crimea, these attacks caused severe petrol shortages, forcing authorities in Sevastopol to implement fuel rationing via a coupon system. Meanwhile, the United Kingdom has implemented new sanctions targeting cryptocurrency exchanges and the A7 network to further disrupt Russian war funding.