This year's Zapad military exercises may have attracted the interest of European governments as they are the first joint Russia-Belarus exercises since the invasion of Ukraine and they included the launch of the Oreshnik hypersonic missile in the Barents Sea and tests of tactical nuclear weapons, but the issue of the Russian economy and the Russian budget forecasts are being followed with equal interest, especially after the dissatisfaction expressed by Vladimir Putin himself about the economic slowdown yesterday.

Following the presidential discontent, the baton for a position on the Russian economy and specifically the budget was taken by the former president of the country and chairman of the ruling United Russia party, Dmitry Medvedev.

Medvedev doesn't want a balanced budget

According to Medvedev, the draft budget for 2026 that is being prepared is for a wartime period, but as he argued, this does not mean that social spending, including support for veterans of the war in Ukraine, should be sacrificed on the altar of balancing the economy.

The Mishustin government must submit a draft 2026 budget to parliament by October 1, as well as a revision to this year's deficit. It expects this year's deficit to be larger than the projected 1.7% of GDP.

Wartime budget but no cuts in social spending

The budget has never been a simple thing and now, frankly, it is a wartime budget, Medvedev told the United Russia parliamentary group before discussions on the draft. He dismissed the term balanced budget as a euphemism.

The country's development should not be sacrificed for the sake of a so-called balance, Medvedev added, pointing to the multiple social spending programs, which were part of his party's election promises in 2021 when the last elections were held, which once again won his party (since 2003 it has not lost a contest with percentages above 37%).

Dissatisfaction with official figures

Russia's economic growth is expected to slow to at least 1.2% in 2025, the fourth year of the war in Ukraine, from 4.3% in 2024. Combined spending on defense and national security will reach 17 trillion rubles ($204 billion) in 2025, the highest amount since the Cold War, accounting for 41% of total spending and making the defense sector the main driver of economic growth.