Russian elite could turn on Putin as leader walks tightrope over costly war | World | News

Officials at Russia’s Finance Ministry and central bank have warned the Kremlin that the current level of projected defense spending could increase the country’s budget deficit, Bloomberg News reported.

Officials became more concerned about Russia’s economy and state budget and proposed spending cuts. But there appears to be a difference of opinion between Defense Ministry officials and some officials in the Kremlin on how to resolve the issue.

Putin reportedly asked the Ministry of Finance to cut spending in other areas of the budget before receiving money from defense.

Reducing defense spending could hurt Russia’s economy, as many businesses depend on military-related contracts, Bloomberg reported.

The size of the spending cuts is entirely up to Putin, as no major budget decisions are made without his approval.

According to two sources close to the Russian government, the Defense Ministry is demanding additional funds in addition to rejecting the cuts.

While preparing the 2026 budget, officials understood that a financing gap of approximately 1.2 trillion to 1.5 trillion rubles could emerge for the defense sector in the second half of the year.

There were hopes that the war would end after the summit between Putin and the US President last August. Donald TrumpIt has been reported that a reduction in defense spending in the second half of 2026 would be a reasonable assumption.

The talks took place before and after the start of the US-Israeli war in Iran and remain a lively discussion between senior policymakers and Putin, sources familiar said.

Russia’s economy is walking a tightrope after the country cut its growth forecast in May.

The Ministry of Economy expects gross domestic product to increase by 0.4% in 2026, from the previous forecast of 1.3%. Official data show that the economy contracted in the first quarter for the first time in three years as the country entered recession.

In April, Putin ordered government officials to explain why the economy was performing below expectations.

The acknowledgment that the economy was in trouble appeared to signal officials’ frustration at their inability to prevent a slowdown.