Moscow, Russia. Russia is preparing a possible 10% cut to all “non-sensitive” spending in this year’s budget, sources told Reuters, with a final decision depending on whether an oil price rise linked to the war in Iran is sustained.
Revenue pressure and reserve fund plans
As the war in Ukraine enters its fifth year, Russia is facing falling budget revenues from energy sales and an economic slowdown affecting tax income from other sectors, the sources said. The government is planning to divert more money into the budget reserve fund to prevent potential depletion, a move that could be accompanied by corresponding spending cuts.
Finance Ministry discussions and scope of cuts
“The Finance Ministry has informed agencies distributing budget funds that there is a need to cut spending. They are now sitting around thinking what to cut,” one source said on condition of anonymity due to the sensitivity of the situation. Two of four sources said a 10% reduction had been mentioned in Finance Ministry communications, while two others said cuts were under discussion without specifying a figure. The Finance Ministry did not respond to a Reuters request for comment.
Areas likely to be spared and targeted reductions
The sources said the cuts would not be across the board and would spare politically sensitive military spending and socially sensitive spending such as public sector salaries and welfare payouts. “This is always done by optimising non-essential expenses. Some new projects will be put on hold, such as construction or road repairs. These are likely to be considered for cuts,” another source said.
Impact on households and recent budget figures
The sources said ordinary people have been hit by rising inflation but have yet to feel widespread pain from an economic slowdown driven by high interest rates, and that spending cuts have not yet caused mass layoffs. They added that Western sanctions have hurt Russia’s global energy sales. In the first two months of 2026, Russia’s budget energy revenues halved while overall revenues fell by 11%, and Russia plans a budget deficit of 1.6% of gross domestic product in 2026 after raising its deficit estimate twice last year.
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