Vladimir Putin has been warned that he cannot afford to sustain his war in Ukraine at the current pace as Kyiv continues to tally frontline wins and devastate energy infrastructure deep inside Russia.
Top finance officials and Russia’s central bank are said to have urged the Kremlin to rein in spiralling defence spending as both sides ramp up costly aerial attacks on vital infrastructure.
Ukrainian foreign minister Andrii Sybiha said on Tuesday that Moscow is “losing on the battlefield” and “has no cards except terror” despite a major blitz of cities across the country overnight that killed at least 22 people.
As Kyiv continues to pile on pressure with strikes against Russian energy infrastructure, defence officials in Moscow reportedly told Putin that they will need billions of extra dollars this year to fund the conflict, according to Bloomberg News.
Putin is said to have told the finance ministry to find savings elsewhere after the finance ministry suggested spending would have to be cut to avoid a widening budget deficit becoming unmanageable.
It emerged last week that finance minister Anton Siluanov had anticipated Russia would run at least $28bn over budget in its war spending this year, according to documents reviewed by the Financial Times.
A letter from Siluanov in February reportedly urged the cabinet to freeze around $40.8bn in planned non-war-related spending this year.
He was also said to have projected that Russia would overspend on the conflict by a further $54.8bn in 2027 and 2028.
Siluanov told Russian newspaper Kommersant last week that the finance ministry was revising the budget to account for “changes in macroeconomic conditions [and] the need to concentrate additional resources on important priority areas”.
“Of course, there are absolute priority spending items: fulfilling social obligations and ensuring the country’s defence and security,” he said.
“Otherwise, we analyse each item for economic return, achievement of results and, ultimately, its impact on people's wellbeing.”
Siluanov suggested further cuts could still follow: “Reserves are not infinite. We cannot afford any financial slack in the face of such large-scale global transformations. No one will give us any breaks.”
Around two-fifths of the budget has been set aside for defence and security this year as the conflict rages on.
Major investment into industry and procurement has buoyed Russia’s economy in recent years, but analysts warn that the appearance of economic growth is illusory and that disentangling from a war economy will incur more challenges.
Sources told Bloomberg that the Russian defence ministry and the Kremlin have urged against defence cuts that would damage businesses reliant on lucrative defence contracts.
Dr Nigel Gould-Davies, senior fellow for Russia and Eurasia at the International Institute for Strategic Studies think tank, warned last month that on its present course, the war is “likely to prove economically unsustainable”.
“The Kremlin will soon face a fundamental choice over whether to radically escalate its demands on Russia’s economy and society or to scale back its war aims,” he said, as civilian sectors apart from the war stomach inflated costs of capital, labour and goods, as well as rising taxes.
Russia's $3 trillion, commodity-dependent economy slowed sharply to about 1 per cent growth last year from 4.9 per cent in 2024, and shrank by 0.2 per cent in the first quarter of 2026, which officials blamed on high interest rates, Western sanctions and a strong rouble. Growth is now forecast at a modest 0.4 per cent this year.
Ukrainian president Volodymyr Zelensky, meanwhile, has said the advance of Russian forces has slowed on the ground while Ukraine has intensified a campaign of medium and long-range strikes inside Russia, targeting mainly Russia’s oil industry.
Drone attacks deep inside Russia on refineries, fertiliser plants and ports have knocked out a significant part of the economy, affecting one-quarter of refining capacity, and creating the risk of fuel shortages in the driving season.
