Military budget of the Russian Federation

2018 budget

The expenses for the maintenance of the Armed Forces of the Russian Federation next year will amount to 1.3 trillion rubles, and for their re-equipment - 1.5 trillion. This was reported on Friday by Deputy Defense Minister Tatyana Shevtsova.

The cost of national defense is not equal to the cost of maintaining the army
emphasized the deputy minister. She said that in 2016 and 2017 equipment costs exceeded the maintenance costs of the army, specifying that they accounted for 60 and 40% of the department's budget in this period, respectively.

Speaking about 2018, Shevtsova noted that this trend will continue - "1.5 trillion - the cost of re-equipment, 1.3 trillion - maintenance costs."

In particular, according to the section "Expenses for equipping the Armed Forces" from 2015, tax payments of enterprises of the defense industry complex to local and regional budgets amounted to 481 billion rubles, for wages - 444 billion rubles.

On December 22, the Russian Defense Minister, Army General Sergei Shoigu, announced at the final panel of the Defense Ministry with the participation of Russian President Vladimir Putin that the military budget for 2018 will be $ 46 billion.

franco wrote:
On December 22, the Russian Defense Minister, Army General Sergei Shoigu, announced at the final panel of the Defense Ministry with the participation of Russian President Vladimir Putin that the military budget for 2018 will be $ 46 billion.

No, it will be ~2,83 trillionw  of rubles.

Today's exchange yields 49,197,143,899.82 USD not including PPP (~ x2) and hidden spending (like R&D for dual use)

GunshipDemocracy wrote:

franco wrote:
On December 22, the Russian Defense Minister, Army General Sergei Shoigu, announced at the final panel of the Defense Ministry with the participation of Russian President Vladimir Putin that the military budget for 2018 will be $ 46 billion.

No, it will be ~2,83 trillionw  of rubles.

Today's exchange yields 49,197,143,899.82 USD not including PPP (~ x2) and hidden spending (like R&D for dual use)

Again, the PPP is actually almost 4 times bigger.. OK maybe a little less than that atm, but still more than 3x. Russia's PPP GDP per capita is around 25K -> 4 trillion.

Maybe. 3x as big or maybe 2.5x as big. But if we go back to time when the Ruble was 35 to the USD, prices of military equipment for Russia is the same as it is now with some being a bit more expensive and some being much cheaper. But even then at that time, 1B of Rubles spent got them a lot more than what equivalent in USD can get you in the US.

Regardless, the world is moving away from using USD as main trading currency (one of the reasons for US support of current regime change in effect in Iran) and things will get more interesting in future. Maybe we can start by not comparing it to USD.

https://vpk.name/news/203874_v_20162017_gg_minoboronyi_rossii_sekonomilo_130_mlrd_rub_za_schet_uskorennogo_pogasheniya_kreditov.html

In 2016-2017, the Ministry of defense of Russia has saved 130 billion RUB due to the accelerated repayment of loans

TSAMTO, January 15. The Ministry of defence has saved more than 130 billion rubles due to the accelerated repayment of loans issued to enterprises of the military-industrial complex (MIC).

The facility was closed rapidly. The decision to accelerate the repayment was made to save budget. In 2016, was returned to 792 billion rubles, in 2017 – 186,8 billion.

Due to the return of these loans was a savings of 130.7 billion rubles from the budget, which were aimed at the development of the Armed Forces. It closed a number of additional needs of the Ministry of defense, the Department of information and mass communications of the Russian defense Ministry.

https://www.nextbigfuture.com/2017/12/usa-vs-china-vs-russia-in-weapons-procurement.html

Interesting chart comparing American, Chinese and Russian military procurement.

In nominal terms:

USA: $155 billion
China: $70 billion
Russia: $34 billion

Which in PPP terms means that the China's procurement is already (atleast) equal to the US, while Russia is roughly at 50% going forward, maybe slighty higher.

Sounds quite accurate to me.

Basically does Russia overspend on defence? Its defense spending as a percentage of GDP is at 5.3 percent according to SIPRI, and compared to the US, the US did not spend this much since the Cold War. And Russia's government spending as a percentage of GDP is not that high, and the military competes with other priorities in the budget like infrastructure, education, and the health budget. If you look at Russia's size plus low density plus awful climate, and the need to keep its population connected, that basically mens that Russia has to spend proportionally more on infrastructure, with a lower population to support such infrastructure spending relative to the size of the road of rail network, compared to say, Germany.

I don't know where SIPRI is getting that figure. The official budget's share should fall to around 2.9% this year, IIRC. Of course, there's some hidden spending as well, but I have not seen any seen reliable estimates, atleast not before that SIPRI's 5.3%. 5% in the long-term would certainly be slighty too much, around 3% would be perfect, IMO.

ren0312 wrote:Basically does Russia overspend on defence? Its defense spending as a percentage of GDP is at 5.3 percent according to SIPRI, and compared to the US, the US did not spend this much since the Cold War. And Russia's government spending as a percentage of GDP is not that high, and the military competes with other priorities in the budget like infrastructure, education, and the health budget. If you look at Russia's size plus low density plus awful climate, and the need to keep its population connected, that basically mens that Russia has to spend proportionally more on infrastructure, with a lower population to support such infrastructure spending relative to the size of the road of rail network, compared to say, Germany.

First of all your numbers are flat out wrong. 2nd and even more important evaluating effect of military spending by comparing share of currency spending on military relative to GDP is stupid reductionist. It does not matter how much money is spend on defence because money has fiat supply that competently run state can produce in infinite quantity, thus it can not ever become economic bottleneck unless there is deliberate sabotage by government and/or ruling oligarchy.

What is excessive or insufficient spending is determined by physical limitations that are not in infinite supply. Those are, first above all, availability of labour, flowed by raw materials, and then means of production (tools, factories, assembly lines and so on).

So to determinate if there is insufficient or excessive "spending" being done on "defence" one has to first see if Russia has sufficient labour. And it does. In fact Russia does not have full possible employment and government should seek the way to employ it's labour to full possible capacity by expanding military and other production. Anything else would be inefficient waste of productive labour.

Next we can evaluate availability of raw materials and can conclude that for Russia they are extremely plentiful, and certainly not a bottleneck.

Finally we should see if factories, assembly lines and shipyards are running at full capacity. Do they work at full 3 shifts, or only in part of the day, do manufacturing machines idle good part of the shift or are they fully at work 24/7, do shipyard docks sit idle with no production or frozen production. Looking all the reports it is obvious Russian military manufacturing facilitates are heavily underused and could allow for much greater output of war material then they currently do.

So given all of this it can be concluded Russian state is heavenly underspending, both on military and for other state affairs, and that is largely consequence of it being dominated by neoliberal oligarchy more concerned with their private short term interests then with interest of the state and the people.

MOSCOW, March 16 (Itar-Tass) - RIA Novosti. The Russian government intends to cut defense expenditures by the share of GDP and increase the efficiency of other budget expenditures to fulfill the president's orders, since the peak of saturation of the Armed Forces with new weapons and equipment has already been passed, presidential aide Andrei Belousov told journalists.

According to him, in order to fulfill the tasks set by the president following the message to the Federal Assembly, an amount equivalent to 1.5% of the Russian GDP will be required.

"Approximately half of the resources to 1%, even about two thirds - we will get due to the acceleration of economic growth from 2% to 3.5-3.8-4%, somewhere in this range, as it is formulated in the message, and in the list of instructions, "Belousov said.

"We will have to look for the rest of the funds (with the help of additional savings), of course, there are such opportunities in the budget." Now we will most likely cut the defensive spending from the share of GDP due to the fact that we passed the peak of the saturation cycle armed forces with new types of weapons and military equipment, "he said.

franco wrote:MOSCOW, March 16 (Itar-Tass) - RIA Novosti. The Russian government intends to cut defense expenditures by the share of GDP and increase the efficiency of other budget expenditures to fulfill the president's orders, since the peak of saturation of the Armed Forces with new weapons and equipment has already been passed, presidential aide Andrei Belousov told journalists.

According to him, in order to fulfill the tasks set by the president following the message to the Federal Assembly, an amount equivalent to 1.5% of the Russian GDP will be required.

"Approximately half of the resources to 1%, even about two thirds - we will get due to the acceleration of economic growth from 2% to 3.5-3.8-4%, somewhere in this range, as it is formulated in the message, and in the list of instructions, "Belousov said.

"We will have to look for the rest of the funds (with the help of additional savings), of course, there are such opportunities in the budget." Now we will most likely cut the defensive spending from the share of GDP due to the fact that we passed the peak of the saturation cycle armed forces with new types of weapons and military equipment, "he said.

What? Play with words here makes it confusing. So defence budget is 1.5% this year? Or what's being said?

http://tass.com/defense/994572

This helps make sense since it's in native English.

So to make Putin's plans that were mentioned at state of the nation address, Russia needs 1.5% of it's GDP for it. The drop of 1% of GDP that was pushed by defence spending is what helps fund that. Plus reducing the construction budget.

Neoliberals have won. There will be no significant expansion of Russian economy. Civil and military modernisation will be driven to a crawl, if even that.

ZoA wrote:Neoliberals have won. There will be no significant expansion of Russian economy. Civil and military modernisation will be driven to a crawl, if even that.

Please don't be hysterical.

The budget is still set at 2.6~% of it's GDP. They are referring to the difference it is this year vs last.

Which makes it all fall in line in SAP2020.

Can you instead of being stupid, provide sources how it's not going to expand? Russian economy is doing quite fine on the contrary.

miketheterrible wrote:

ZoA wrote:Neoliberals have won. There will be no significant expansion of Russian economy. Civil and military modernisation will be driven to a crawl, if even that.

Please don't be hysterical.

The budget is still set at 2.6~% of it's GDP. They are referring to the difference it is this year vs last.

Which makes it all fall in line in SAP2020.

Can you instead of being stupid, provide sources how it's not going to expand? Russian economy is doing quite fine on the contrary.

Whether Putin is using liberals to do unpopular tasks (firing state administration, pension reform, buying US t-bonds) or he had to and believes in different story we'll see soon after elections.

Oh I would forget elections will be illegitimate at least in UK

GunshipDemocracy wrote:

miketheterrible wrote:

ZoA wrote:Neoliberals have won. There will be no significant expansion of Russian economy. Civil and military modernisation will be driven to a crawl, if even that.

Please don't be hysterical.

The budget is still set at 2.6~% of it's GDP. They are referring to the difference it is this year vs last.

Which makes it all fall in line in SAP2020.

Can you instead of being stupid, provide sources how it's not going to expand? Russian economy is doing quite fine on the contrary.

Whether Putin is using liberals to do unpopular  tasks (firing state administration, pension reform, buying US t-bonds) or he had to and believes in different story we'll see soon after elections.

Oh I would forget elections will be illegitimate at least in UK

None of what you said has anything to do with the defense budget 19T Rubles were assigned for 2018-2027 and 1T for mic. So it's all within plan.

Franco, if you are still on, please provide explenation in what you quoted. There still lacks details.

Our understanding is that defense budget for 2018 is 2.8% of GDP. Is this still correct?

miketheterrible wrote:Franco, if you are still on, please provide explenation in what you quoted.  There still lacks details.

Our understanding is that defense budget for 2018 is 2.8% of GDP.  Is this still correct?

I don't make them up... I just report them

As far as I know, the budget remains the same. My take is that this speaker is talking about into the future and using growth in the economy along with savings in other areas to keep defense costs down ie spending the same dollars but out of a larger pool. I feel perhaps a bit of political double talk coupled with a optimistic viewpoint.

Tatyana Shevtsova, the deputy Defense Minister in charge of the money gave an interview yesterday and she made no mention of cuts.

https://translate.googleusercontent.com/translate_c?depth=1&hl=en&rurl=translate.google.com&sl=auto&sp=nmt4&tl=en&u=https://www.gazeta.ru/army/2018/03/16/11686021.shtml&xid=17259,15700023,15700043,15700105,15700124,15700149,15700168,15700173,15700186,15700201&usg=ALkJrhgZvU__ppX8z6uzzL2P9V8gZcQb0Q

I agree, that's how I read that as well. They are simply talking about the already well known "cuts" to around 2.8-3% of GDP. Any additional cuts would make absolutely no sense. The federal budget is going into surplus and budget spending should start increasing from 2019, as well as economic growth.

Russia will not increase defense spending

http://www.interfax.ru/business/603968

Thanks guy, that's how I read it too. They will be strict with the budget. It will stick to 2.8% this year and it won't increase. They are looking to only "increase" it via efficiency with current amounts.

Which is fine cause I believe through new methods of contractual agreements and legal, the MoD saved a good amount, upwards to a billion dollars. So it really goes to show how unefficiency really eats away at a budget.

Here we see how the 5th column at the CBR is sabotaging Russia's security. The Russian government cannot afford to borrow money
on the domestic market so it cannot run deficits (or large ones like the USA). This means having to cut back critical expenditures. People
always forget opportunity cost (or even necessity cost) when deficits are discussed. In the real world saving a dollar today does not
earn you dollar + interest in the future. It could "earn" you a loss of many dollars and even the loss of your existence as a state.

BTW, as far as macroeconomics is concerned domestic borrowing puts no burden on the economy and is in fact a form of stimulation
since it increases the flow of money. Borrowing abroad is a bad idea and does have net negative impact on the GDP.

kvs wrote:Here we see how the 5th column at the CBR is sabotaging Russia's security.   The Russian government cannot afford to borrow money
on the domestic market so it cannot run deficits (or large ones like the USA).   This means having to cut back critical expenditures.   People
always forget opportunity cost (or even necessity cost) when deficits are discussed.   In the real world saving a dollar today does not
earn you dollar + interest in the future.   It could "earn" you a loss of many dollars and even the loss of your existence as a state.  

BTW, as far as macroeconomics is concerned domestic borrowing puts no burden on the economy and is in fact a form of stimulation
since it increases the flow of money.    Borrowing abroad is a bad idea and does have net negative impact on the GDP.

Umm, Russia is borrowing from internal structures. Thats why deficit will be also up this year.

And budget spending should start increasing quite rapidly from 2019. It's true that they're probably too conservative, but what can you do...

https://ria.ru/defense_safety/20180323/1517079904.html

This is interesting. While it was stated that 2018 defence budget would be ~2.8% of GDP, its being said that after 5 years the defence budget would "drop to about 3% of GDP". So there may be an indication that defence spending is higher this year than initially claimed.