Military budget of the Russian Federation

George1 wrote:

Russia spends 11 times less than the United States on defense and one-third of China's defense spending, Russian Defense Minister Sergei Shoigu said Wednesday.

https://sputniknews.com/military/201705241053929851-russia-defense-spending-us-china/

"With this level of funding we have managed to enhance the combat capabilities of the Armed forces by 14%, and to ensure strategic parity with NATO countries," - said the Minister.

Austin wrote:I would suppose PPP comes into picture here for Russia , What would $1 buy in US versus what they would get in Russia

franco wrote:WASHINGTON, June 15 - RIA Novosti. Russia will reduce defense spending in the next three years to 2.7-2.8% of GDP, said Russian President Vladimir Putin.

"There is an understanding that the economy is the most efficient in the state, therefore, the army should be compact, but modern and efficient, but we are already spending a lot." These expenditures reached more than three percent last year, "Putin said in an interview Director Oliver Stone in the film, shown on the television channel Showtime .

The interview was recorded from July 2015 to February 2017.

According to him, "this is for us and so much." "This year, the main article of saving the budget is just due to the preservation of defense spending, which will gradually return to 2.7-2.8% of GDP in the next three years," Putin added.

NOTE: my take on this is that the present projected budget for 2018-2020 remains close to as is and then the 2021-2025 period decreases to below 3%. That would mean around 2,400-2,500 billion rubles a year.

— According to the Finance Ministry’s estimates, the newly-extended rearmament program until 2020 has to fit into the 14-trillion ruble ($234 billion) allotment. The Defense Ministry had asked for 20 trillion ($335 billion). Whose arithmetic is better?

We will be able to see that after some time, when we make it clear the amount of resources actually available. In any case, we should proceed from the realities and remember that economic security is no less important than military security

The coming three years will not be easy ones. At this point we foresee the first increases in the budget’s incomes will be in 2020. Then we will be able to afford more.

— At whose expense?

The economy’s overall growth remains first and foremost. We are to ease the imbalance that developed due to the slump in budget incomes amid an unfavorable environment in foreign markets and the sanctions taken against our country. The spending obligations accrued in the previous years, when the country was selling its oil for $100 per barrel are really large ones. Now the budget deficit has to be reduced, because it is financed with our reserves. The thrift box is not bottomless. We cannot afford to spend it all and have nothing left for a rainy day. The risks are too high. The assumed commitments inside the country are not the only thing I’m talking about. Foreign investors keep a close eye on the situation. They evaluate likely scenarios, too. Will the government raise taxes and at whose expense will it be honoring its obligations?

Our prime task is to balance the budget. We comprehend a balanced budget as one where incomes are equal to spending minus the interest on loans. In other words, the budget deficit is to constitute about 0.8% of the GDP. This poses no risks – economic, social or political. We can refinance such a deficit without tapping government reserves, to service it with further borrowings, without resorting to massive privatization transactions like those we saw in 2016.

miketheterrible wrote:That question doesn't make sense since the extension of the SAP2020 is till 2025.  Unless that is exactly what they are saying.  Also interesting how it has been increased by 2T rubles from 12T to 14T from the finance ministry side.  But the defense ministry has been asking for 30T rubles, not 20T: http://tass.com/defense/947279

But if it is 14T from 2020 to 2025, then that is a bit higher than 2.4T per year (2.8T per year).  If they mean by 8 years, then that is only 1.75T per year.  Which is below the 2.7 - 2.8% of Russias GDP that Putin stated.  But if that is the budget from 2018 to 2025, and by 2020 they spend about 2.8% of GDP on defense, that would mean that after 2020, they would be spending about 1% of GDP on defense which is not exactly what is planned.

So there is a lot of issues with what questions are being asked and what is going on.  Unless translation is completely wrong.

franco wrote:

miketheterrible wrote:That question doesn't make sense since the extension of the SAP2020 is till 2025.  Unless that is exactly what they are saying.  Also interesting how it has been increased by 2T rubles from 12T to 14T from the finance ministry side.  But the defense ministry has been asking for 30T rubles, not 20T: http://tass.com/defense/947279

But if it is 14T from 2020 to 2025, then that is a bit higher than 2.4T per year (2.8T per year).  If they mean by 8 years, then that is only 1.75T per year.  Which is below the 2.7 - 2.8% of Russias GDP that Putin stated.  But if that is the budget from 2018 to 2025, and by 2020 they spend about 2.8% of GDP on defense, that would mean that after 2020, they would be spending about 1% of GDP on defense which is not exactly what is planned.

So there is a lot of issues with what questions are being asked and what is going on.  Unless translation is completely wrong.

Military budgets in Russia are projected for 10 years but revised every 5 years for actual amounts.
The 2011-2020 projected budget was to have been revised in 2015 for the 2016-2020 actual and 2016-2025 projected.
This was put off due to the economic crisis.
So they are doing a 2018-2020 actual with a 2018-2025 projection right now.
The idea is long term planning coupled with short term reality.
It will be revised again in 2020 for 2021-2030 projection.
Clear as mud... right?

miketheterrible wrote:

franco wrote:

miketheterrible wrote:That question doesn't make sense since the extension of the SAP2020 is till 2025.  Unless that is exactly what they are saying.  Also interesting how it has been increased by 2T rubles from 12T to 14T from the finance ministry side.  But the defense ministry has been asking for 30T rubles, not 20T: http://tass.com/defense/947279

But if it is 14T from 2020 to 2025, then that is a bit higher than 2.4T per year (2.8T per year).  If they mean by 8 years, then that is only 1.75T per year.  Which is below the 2.7 - 2.8% of Russias GDP that Putin stated.  But if that is the budget from 2018 to 2025, and by 2020 they spend about 2.8% of GDP on defense, that would mean that after 2020, they would be spending about 1% of GDP on defense which is not exactly what is planned.

So there is a lot of issues with what questions are being asked and what is going on.  Unless translation is completely wrong.

Military budgets in Russia are projected for 10 years but revised every 5 years for actual amounts.
The 2011-2020 projected budget was to have been revised in 2015 for the 2016-2020 actual and 2016-2025 projected.
This was put off due to the economic crisis.
So they are doing a 2018-2020 actual with a 2018-2025 projection right now.
The idea is long term planning coupled with short term reality.
It will be revised again in 2020 for 2021-2030 projection.
Clear as mud... right?

sort of.

Problem is though, if they say 14T for it, that means for the next e years they will drop the funding from 2.5T to 1.75T, yes? So till 2020, they will be heavily under funded, even though initial agreement was 2.8% of GDP? Or will it continue to be the 2.5T and then by 2020, they will revise it?

Austin wrote:If money is a problem via Budget , They have two option borrow more money in terms of Debt  , Russian Debt is one of the lowest in world around 14 % of GDP.

Take money from Central Bank , CB has more than 400 Billion in Reserves , Even taking $50 billion into budget wont do much harm.

Defence should be a priority in the next 10 years cant afford to go slag on that in the name of reducing budget deficit

The financing of the state armament acquisition program in 2011-2020 is about 20 trillion rubles ($345 billion). The defense procurement totaled 1.8 trillion rubles in 2016, 1.8 trillion rubles ($31 billion) in 2015 and 1.6 trillion ($27.4 billion) in 2014.

jhelb wrote:Not sure if you guys noticed - Russian state armament programme to 2025 announced recently has Land Forces as top priority

Austin wrote:
Yes has to be after the Ukraine and Syria Experience , Also Russia is a major continental power.

Land Forces is top priority followed by Airforce and Navy in Previous SAP 2020 Land Forces was given the least money

miketheterrible wrote:Judging by how the ministry of Industry and Trade says and what Putin says, I think the budget for the procurement in 2018 - 2025 will be about 2.4T - 2.5T Rubles per year.  Only because this is what people higher up than the economic minister is saying and the fact that most, even in the economic sectors, are warning about problems if they reduce the budget for procurement.

But I was also reading that last year and this year, the amount provided for procurement is 1.8T - 1.7T rubles:

http://tass.com/defense/947279

The financing of the state armament acquisition program in 2011-2020 is about 20 trillion rubles ($345 billion). The defense procurement totaled 1.8 trillion rubles in 2016, 1.8 trillion rubles ($31 billion) in 2015 and 1.6 trillion ($27.4 billion) in 2014.

Now, I am wondering, is this extension (The Proposed 14T to 20T) entirely on procurement on weapons or is there other things attached to this budget (housing and wages for staff, maintenance costs, etc)?

Austin wrote:Actually its a very short term myopic decision to reduce defence spending .....Defence Spending should not be less than 3-3.5 Trillion Roubles.

Defense projects have longs gestation period typically 5-7 years so less spending today will show up 5 years later and no money spend then could rectify or speed it up.

Russia can easily spend 3-3.5 trillion roubles if not from budget then borrow from central bank 1 trillion rouble each year they have huge forex and its growing , Defense Spending will only go into National Economy and Civilian Economy and MIC is diversifying they should not cut spending now or for next 10 years but spend each year 3 trillion to 30 trillion rouble in next 10 years.

No point in keeping Public Debt low at cost of national security and development it will hurt russia big time in years ahead. Even a Public Debt of 30 % of GDP is considered Low and Managable , Russia is still at 13 % today

Putin is acting Penny Wise Pound Foolish !   Hope he does not stand for Election and some one like Rogozin stands instead he is more Nationalist and Understands things that Putin does not.

Kick Medvedev/Putin Duo and CBR Thugs out from Kremlin

kvs wrote:

Austin wrote:Actually its a very short term myopic decision to reduce defence spending .....Defence Spending should not be less than 3-3.5 Trillion Roubles.

Defense projects have longs gestation period typically 5-7 years so less spending today will show up 5 years later and no money spend then could rectify or speed it up.

Russia can easily spend 3-3.5 trillion roubles if not from budget then borrow from central bank 1 trillion rouble each year they have huge forex and its growing , Defense Spending will only go into National Economy and Civilian Economy and MIC is diversifying they should not cut spending now or for next 10 years but spend each year 3 trillion to 30 trillion rouble in next 10 years.

No point in keeping Public Debt low at cost of national security and development it will hurt russia big time in years ahead. Even a Public Debt of 30 % of GDP is considered Low and Managable , Russia is still at 13 % today

Putin is acting Penny Wise Pound Foolish !   Hope he does not stand for Election and some one like Rogozin stands instead he is more Nationalist and Understands things that Putin does not.

Kick Medvedev/Putin Duo and CBR Thugs out from Kremlin

Russia should indeed run up a ruble debt at very low or zero interest rate from the CBR to finance critical military spending.    The
problem is that people in Russia are still living like it was before 1990 in many ways.   They do not fully grasp financing.   Taking out
loans is required to reduce opportunity cost.   Pinching pennies today will get you messed up badly because you let important
opportunities (and in fact necessities) slide.   This dynamic is readily evident from business financial activity.   Borrowing is
a necessity and not some luxury or fiscal irresponsibility.  

Of course total reliance on borrowing for GDP growth is stupid and is messing up the 1st world.    But military spending is
a small part of the GDP and the associated debt will be manageable when the re-arming period is over.