Page 69 - RusRPTOct23

6.1.1 Budget dynamics - results
Russia’s draft federal budget for 2024, suggests that before the 2024 election, the Kremlin is going all-in on the war in Ukraine. Specifically, the Kremlin is attempting to rely more strongly on domestic war profiteers and the economic conjuncture generated by the defence industrial complex.
According to the draft budget, in 2024, defence expenditures will grow from 6.4 trillion rubles ($66.3bn) to 10.8 trillion rubles ($112bn), roughly three times pre-war levels and 6% of GDP – triple what Ukraine is spending ($33bn). This is the first time ever that defence spending will exceed social spending.
Expenditures on national security—including domestic law enforcement and security services, which also experienced significant growth over the past years—will be kept roughly at level. Expenditures under the “social policy” heading, however, will increase to 7.5 trillion rubles ($77.7bn) after 2023’s 6.5 trillion rubles ($67.3bn). Regions (and large enterprises) will likely have to make up the numbers for both social security measures and expenditures under the “national economy” heading, which consists of state-funded investments. This will drop from 4.1 trillion ($42.4bn) to 3.9 trillion rubles ($40.4bn) in nominal terms, a more than 10% drop when inflation is factored in. State employees should not expect salary hikes in 2024.
In a further move to prop up the federal budget, the government announced flexible export duties for most products (except for oil, oil products, gas, timber, grain, and certain types of machinery). The rate, moving between 4% and 7%,
69 RUSSIA Country Report October 2023 www.intellinews.com