Military budget of the Russian Federation

Austin wrote:Does Russia have the financial means for its military ambitions?

Austin wrote:Does Russia have the financial means for its military ambitions?

Developments since 2014 have not been kind to Russia’s economy. Heavily dependent on oil and gas export revenues, the nation’s currency, gross domestic product (GDP), and real living standards, all suffered substantially from the sharp fall in oil prices that occurred in late 2014. Russian GDP shrank by 3.7% in real terms in 2015, and is generally expected to fall by a further 0.8% this year, according to the October 2016 forecast of the International Monetary Fund (IMF).

Big_Gazza wrote:

Austin wrote:Does Russia have the financial means for its military ambitions?

Why would anyone trust anything those HATOstani bastards say about Russia?  Fuck them and their bullshit...

Russia slashes military spending as revenues shrink

The protracted slump in oil prices mean the government is no longer able to finance its reform of the defense industry at previous levels.

As the economy continues to struggle under the weight of low oil prices and sanctions, Russian authorities have decided to cut defense spending by 1,000 billion rubles ($15.89 billion), or by approximately 30 percent.

The figures became clear from the draft federal budget that the government submitted to the State Duma at the end of October, business daily Kommersant reports.

Overall, spending on national defense in the federal budget for 2017 is envisaged at 2,840 billion rubles ($45.15 billion), or 3.3 percent of GDP.

“When revenues are falling, the task of reaching a compromise between different recipients of the budget pie fades into the background. What matters is to ensure, albeit on a reduced scale, the operation of the national economy and the state in all the key areas,” says Alexei Kalachev, an expert analyst with Moscow investmenrt company Finam.

With oil prices falling, he continues, it would have been strange to continue increasing military spending while welfare spending is reduced. So the share of military spending is gradually falling. For instance, in 2018 defense spending will amount to 3 percent of GDP, while in 2019 it will drop to 2.8 percent.

Lessons from the USSR
The government’s decision to cut the defense budget has largely been driven by the example of the final years of the Soviet Union, which – despite falling oil prices – continued to boost military spending, thus sinking into a deep crisis that ultimately led to the break-up of the country.

“The main lesson in budget planning to be learnt from the budget of the final years of the USSR is the danger of excessive military spending,” says Sergei Khestanov, a macroeconomics adviser to the head of the Otkrytie Broker financial company.

Khestanov believes this is the reason the government has decided to cut defense spending by a third, despite the fact that the reduction will come as a blow to many defense industry enterprises.

It is not only in defense that spending cuts are imminent: Practically all items in the draft budget will be reduced, but it is defense that will see the biggest cuts.

“The only exception is a sharp rise in the 2017 spending on social policy, which has to do with the presidential election cycle: Before elections butter is far more important than guns,” says Alexei Kalachev.

At the same time, starting from 2017, spending on servicing sovereign debt will see a scheduled boost. By that time, the repository of Russia’s oil-generated superprofits, the Reserve Fund, will be fully exhausted from covering the budget deficit, after which the main source of plugging the budget hole will be increased borrowing.

Economical approach
The amount of the budget deficit primarily depends on the oil price: In 2016, the government plans to keep it at 3 percent of GDP.

“At the moment, the draft budget for the next year is based on quite conservative estimates as regards the oil price, which necessitates a considerable reduction in spending,” explains Mikhail Poddubsky, an analyst with Russian financial services company ТeleTrade. Furthermore, he predicts, it is likely that in future spending will have to be cut even further.

Given the shortage of public funds, the government has already given up plans to launch several new major projects. Among other things, it has even reduced the funding allocated for the revamp of the country’s main railway lines linking Europe and the Far East: the Trans-Siberian Railway and the Baikal-Amur Mainline.

Overall, budget expenditure is planned to be cut from 19.8 percent of GDP in 2016 to 16.2 percent in 2019. Under its long-term plan, the Russian Finance Ministry plans to reduce public spending to 13.1 percent of GDP by 2034.

http://rbth.com/defence/2016/11/01/russia-slashes-military-spending-as-revenues-shrink_644019

Project Canada wrote:

Russia slashes military spending as revenues shrink

The protracted slump in oil prices mean the government is no longer able to finance its reform of the defense industry at previous levels.

As the economy continues to struggle under the weight of low oil prices and sanctions, Russian authorities have decided to cut defense spending by 1,000 billion rubles ($15.89 billion), or by approximately 30 percent.

The figures became clear from the draft federal budget that the government submitted to the State Duma at the end of October, business daily Kommersant reports.

Overall, spending on national defense in the federal budget for 2017 is envisaged at 2,840 billion rubles ($45.15 billion), or 3.3 percent of GDP.

“When revenues are falling, the task of reaching a compromise between different recipients of the budget pie fades into the background. What matters is to ensure, albeit on a reduced scale, the operation of the national economy and the state in all the key areas,” says Alexei Kalachev, an expert analyst with Moscow investmenrt company Finam.

With oil prices falling, he continues, it would have been strange to continue increasing military spending while welfare spending is reduced. So the share of military spending is gradually falling. For instance, in 2018 defense spending will amount to 3 percent of GDP, while in 2019 it will drop to 2.8 percent.

Lessons from the USSR
The government’s decision to cut the defense budget has largely been driven by the example of the final years of the Soviet Union, which – despite falling oil prices – continued to boost military spending, thus sinking into a deep crisis that ultimately led to the break-up of the country.

“The main lesson in budget planning to be learnt from the budget of the final years of the USSR is the danger of excessive military spending,” says Sergei Khestanov, a macroeconomics adviser to the head of the Otkrytie Broker financial company.

Khestanov believes this is the reason the government has decided to cut defense spending by a third, despite the fact that the reduction will come as a blow to many defense industry enterprises.

It is not only in defense that spending cuts are imminent: Practically all items in the draft budget will be reduced, but it is defense that will see the biggest cuts.

“The only exception is a sharp rise in the 2017 spending on social policy, which has to do with the presidential election cycle: Before elections butter is far more important than guns,” says Alexei Kalachev.

At the same time, starting from 2017, spending on servicing sovereign debt will see a scheduled boost. By that time, the repository of Russia’s oil-generated superprofits, the Reserve Fund, will be fully exhausted from covering the budget deficit, after which the main source of plugging the budget hole will be increased borrowing.

Economical approach
The amount of the budget deficit primarily depends on the oil price: In 2016, the government plans to keep it at 3 percent of GDP.

“At the moment, the draft budget for the next year is based on quite conservative estimates as regards the oil price, which necessitates a considerable reduction in spending,” explains Mikhail Poddubsky, an analyst with Russian financial services company ТeleTrade. Furthermore, he predicts, it is likely that in future spending will have to be cut even further.

Given the shortage of public funds, the government has already given up plans to launch several new major projects. Among other things, it has even reduced the funding allocated for the revamp of the country’s main railway lines linking Europe and the Far East: the Trans-Siberian Railway and the Baikal-Amur Mainline.

Overall, budget expenditure is planned to be cut from 19.8 percent of GDP in 2016 to 16.2 percent in 2019. Under its long-term plan, the Russian Finance Ministry plans to reduce public spending to 13.1 percent of GDP by 2034.

http://rbth.com/defence/2016/11/01/russia-slashes-military-spending-as-revenues-shrink_644019

At the session the lawmakers are considering the budget for the 2017-2019 in the first reading.

"Spending on defense is one of the priorities, the volume of purchases of arms and military equipment is not reduced despite all the difficulties," he said.

Earlier it was reported in an explanatory note to the budget, that budgetary allocation under the National Defense section as a whole will amount to 2.8 trillion rubles ($43 bln) in 2017, 2.7 trillion rubles ($41 bln) in 2018 and 2.8 trillion rubles ($43 bln) in 2019.

In relation to GDP, the share of spending on national defense will be 4.7% in 2016, 3.3% in 2017, 3% in 2018, 2.8% in 2019.



The share of defense in total federal budget spending in 2017 will amount to 17.5%, in 2018 and 2019 it will be 17% and 17.6%, respectively.

miketheterrible wrote:Don't tell me, your one of those Canadians who loves to post whatever sensationalist BS article and state "ooh wow! Lets discuss!".  If one has half a brain, they can look at what was the approved budget for defense spending in the next three years. Add to it, our Indian friend Austin pointed it out too. - the procurement system is in place and will be fulfilled even before 2020, with the reduction of 1T rubles per year.

I think we can put a rest to these articles.

Reducing its volume is not expected, will focuson high-tech, Tass said Russian Deputy Prime Minister Dmitry Rogozin.


"When we approve it, (the amount of the state program) will be known - in July next year", - said Deputy Prime Minister, answering the question, what will be the scope of the new state program.


When asked whether the program expected a reduction, Rogozin said: "I do not think." "It will be a different specialization, more on high technologies", - concluded the Vice Premier.
S

Project Canada wrote:
The Russian Military Is Bracing for Massive Cutbacks?

http://russia-insider.com/en/politics/russian-defence-spending-its-ekonomika-stupid/ri17823

kvs wrote:

Project Canada wrote:
The Russian Military Is Bracing for Massive Cutbacks?

http://russia-insider.com/en/politics/russian-defence-spending-its-ekonomika-stupid/ri17823

Spending at 3% of GDP is nothing to sneeze at.   One could argue that spending at 4.5% is excessive and
unnecessary (assuming WWIII is not happening in 2020).



The peak spending around 2015 is transient and cannot be used as a reference point.  And 3% of GDP is
actually above the long term level.   Do not forget that between 2006 and today Russia's GDP has increased
in size.  So in 2006 Russia was spending less on the military in absolute terms than it will in 2018.

In 2018 Russia's GDP will be over 90 trillion rubles, so military spending will be over 2.7 trillion rubles
so the blue curve in the graphic above is just BS.    I do not see any crisis whatsoever.

2011 - 1.515  
2012 - 1.812
2013 -  2.106
2014 -  2.49
2015 -   3.032  
2016 -  3.889
2017 -  2.84
2018 -  2.728
2019 -  2.816

Total =  23,22 Trillion

SAP -2020  projected a figure of 23 trillion rouble   (  20 Trillion of Military Budget + 3 Trillion for MIC )