Secret spending hits record level

The Russian government on Monday sent its 2025-2027 budget to the State Duma, outlining plans that will see defense spending hit a post-Soviet record at 6.3% of GDP. We wrote about the plans for another ramp-up in Russia’s military spending in Friday’s newsletter. The publication of the full budget has revealed two things just as interesting for Russia-watchers: the extent the government has gone to downplay how militarized government spending has become, as well as the massive increase in classified expenditure. 

• For 2025, the finance ministry has classified more than 13 trillion rubles ($140 billion) of its overall 41.5-trillion ruble budget — or 31.6% according to The Bell’s analysis. This is spending that is not attributed to a detailed budget line. The bulk of the secret spending falls under the “national defense” category. It is the third consecutive major rise in the proportion of Russia’s budget that the finance ministry has classified. In 2023, 22.6% of federal expenditure was secret, with that set to rise to 26.8% this year. At almost a third, the 2025 budget will become the most secret in Russian history.
• Aside from spending that is actually classified, the government has also mounted an information campaign to try to obfuscate just how much money is being directed towards the military. More than 40% of the entire budget is allocated to national defense and domestic security. Just like with last year’s budget, the first reports of what would be in the 2025 plans were reported by Bloomberg. In short, instead of keeping their promise to start cutting military expenditure, costs on defense have risen by a quarter year-on-year, and more than 59% compared to original plans for 2025. Outlays on social spending, by contrast, will fall 16%.
• But none of Russia’s leading economic media outlets opted to publish these figures after Bloomberg broke the story — an outlet Russian media has historically been quick to cite and run stories from. Speaking to The Bell, an editor at one major publication recalled what happened last year when Kommersant reported on Russia’s record military budget, using the figures leaked to Bloomberg. The article was removed from the website following a phone call from Prime Minister Mikhail Mishustin’s press secretary. Another editor told The Bell that his outlet could not publish stories relying on Bloomberg without being able to confirm the information independently — something that was impossible because this year the government clamped down on leaks, with no Russian journalist obtaining the budget documents before they were submitted to the Duma.
• But Russian media’s claims they couldn’t report on another massive increase in military spending due to sourcing concerns fell apart on Monday, when the full budget proposals were officially published. Even then, Vedomosti was the only one of Russia’s three leading economic publications to write a separate story about defense spending. And even they only provided raw figures for 2025 with no comparison to previous years and no mention that it would set a new post-Soviet record. RBC briefly mentioned defense spending at the end of a long article about what it called the “first structurally balanced budget in five years,” while Kommersant noted that defense spending accounted for 32.5% of Russia’s planned expenditure, but only in the penultimate paragraph of an article titled “the budget is getting stronger.”
• In downplaying the ramp-up in defense spending, Russian media followed the government’s lead. After the figures were already in the public domain, the finance ministry on Monday issued a big press release about the draft budget. Each section was discussed in a separate chapter on a page containing detailed figures. That is every section, except for “national defense”, the single largest category. That was dismissed in a single paragraph with no figures, instead merely stating that “the draft budget provides significant funds to strengthen the country’s defense capabilities to achieve the aims of the Special Military Operation.”

Why the world should care

Censorship in Russia is developing fast. Two years ago it was almost unimaginable that Russia’s leading economic media would simply ignore a major story from Bloomberg on Moscow’s own government spending plans. And just a year ago it was hard to imagine that none of the major economic papers would write about record military spending even after the figures were officially published by the finance ministry. All of which begs the question: What will Russia’s media landscape look like another year from now? Russia’s business press remains an important source of some information — but it is far from complete and reading between the lines is a must. For the full picture, independent media is essential (and, if you’ll allow us a little plug, first and foremost for English readers, The Bell’s dedicated economic newsletter, out every Friday).