Russia Cuts Budget Spending by 35% and Prepares for Civil Service Layoffs

The Russian government has imposed strict restrictions on budget spending due to a deficit and a lack of resources to finance the war in Ukraine. The austerity measures have been in effect since April following a warning from the Ministry of Finance about insufficient funds to meet all obligations. Budget programs unrelated to the war, salaries, social payments, regional support, and servicing of state debt have been cut by 35%. Federal agencies have been ordered to postpone additional expenditures and prepare for a 15% reduction in staff. The budget deficit for January to July reached 6.5 trillion rubles, or 2.8% of GDP, against an annual plan of 1.6%. It is expected that the deficit will not decrease by the end of the year and may rise to 3.2-3.8% of GDP, amounting to about 9 trillion rubles (approximately 104.7 billion USD). The economic effect of state budget injections has run dry, and 2026 may solidify the state of systemic stagnation in the Russian economy.

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