(Reuters) – Russia’s defence spending was up nearly 40% in the first four months of the year, according to preliminary data released by the finance ministry on Wednesday, almost three months into Moscow’s large-scale military campaign in Ukraine.
Russia spent 1.7 trillion roubles ($26.4 billion) on defence between January and April, almost half the 3.5 trillion roubles, or 2.6% of GDP, budgeted for all of 2022.
The ministry had initially forecast a budget surplus of 1% of GDP, or 1.3 trillion roubles, for 2022, but now expects a deficit of at least 1.6 trillion roubles, allowing for support payouts to counter the effect of an unprecedented barrage of Western economic sanctions.
The government will use Russia’s National Wealth Fund (NWF), a rainy-day cushion built up from oil and gas revenues, to cover the deficit, and also to support the value of stocks and bonds, which have fallen sharply since Moscow sent tens of thousands of troops and heavy armour into Ukraine on Feb. 24.
Some of the NWF is invested in financial markets, and its value fell $20 billion between early February and April, to $155 billion, according to data released on Monday..
In April alone, Russia spent 628 billion roubles ($9.7 billion) on its military, up 128% on April 2021, helping to tip the monthly state budget into deficit for the first time this year.
The finance ministry declined to comment on the increase in defence spending.
Thousands of civilians have been killed in Ukraine and more than 14 million people have fled their homes in a conflict that Russia says was necessary to counter Western aggression and protect Russian-speakers from repression.
Ukraine says it is fighting an imperial-style land grab and that Moscow’s claims of aggressive nationalism and persecution of Russian-speakers are nonsense. ($1 = 64.4010 roubles)