Russian parliament passes record budget, defence spending likely to surpass social spending

The State Duma, the lower house of the Russian parliament, adopted the country’s largest-ever federal budget on Friday which will see a 25 per cent increase in spending by 2024, with record sums going towards defence. For the first time in recent Russian history, defence spending is predicted to surpass social spending in the upcoming year, just as the Kremlin is keen to back President Vladimir Putin ahead of the country’s March presidential election. Record low unemployment, higher wages and targeted social spending should help the Kremlin ride out the domestic impact of pivoting the economy to a war footing, but could pose a problem in the long term, analysts say. Vyacheslav Volodin, the chairman of the State Duma, citing Russian lawmakers, said that the budget for 2024-2026 was developed specifically to fund the military and mitigate the impact of 17,500 sanctions on Russia. In these difficult conditions, we have managed to adopt a budget that will not only allocate the necessary funds for our country’s defense, but which will also provide all the required funds to guarantee the state’s social obligations, First Deputy Chairman of the State Duma Alexander Zhukov said, according to Russian state news agency Tass. The Russian Communist Party voted against the budget because it provides low pensions and not enough financial support for elderly people, Tass said. The budget will now be passed to the Federation Council the upper chamber of Russia’s parliament for approval before it is signed by President Vladimir Putin. The draft budget is about getting the war sorted in Ukraine and about being ready for a military confrontation with the West in perpetuity, Richard Connolly, an expert on Russia’s military and economy at the Royal United Services Institute in London, has said. This amounts to the wholesale remilitarization of Russian society, he said. Russia’s finance ministry said it expects spending to reach 36.66 trillion rubles (around USD 411 billion) in 2024 with a predicted budget deficit of 0.8 per cent of Russia’s gross domestic product. Part of the Russian budget is secret as the Kremlin tries to conceal its military plans and sidestep scrutiny of its war in Ukraine. Independent business journalists Farida Rustamova and Maksim Tovkaylo said on their Telegram channel Faridaily that around 39 per cent of all federal spending will go to defense and law enforcement in 2024.