Russia’s Budget

Sep 30 2024 The New York TImes

Russia to Boost Defense Budget as Ukraine War Drags On

The Kremlin originally planned to cut military spending in 2025, but as the war grinds on, now intends to increase it by 25 percent, to more than $145 billion. The spending has now reached Cold War levels.

Russia’s economy is definitely on a war footing:

The increase means that the Kremlin is allocating more than 32 percent of its state budget to defense, more than to pensions and other social expenditures, health care and education combined.

Desperate times call for desperate measures.

“We are reaching the point when cannons become more important than butter.” … “The main priority is the ongoing war in Ukraine and the restoration of arsenals and the country’s military potential.”

The key interest rate is 19%, which makes loans and mortgages extremely expensive. Inflation is around 8.5% and the unemployment rate has dropped to 2.4 percent, partly because Russia is trying to recruit more soldiers for the war. If you are trying to employ more workers, or just keep your existing ones, you will have to offer higher wages, which will, in the end, further increase inflation.

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Not exactly a recipe for a stable society.