BERLIN, Feb 23 (Reuters) - Russia is clearly developing
into a war economy, with spending on defence increasing while
state revenues shrink, the German Economic Institute IW said in
a report on Thursday.
Russia will this year hike spending on internal and external
security by 25% to 124.7 billion euros ($132.1 billion),
according to the report, to which Reuters had exclusive access
and which cited projections that Russia's state Duma parliament
signed off on in October.
Until 2025, this amount of defence spending is expected to
remain constant, representing over 14% of the budget, the
economic institute said.
While defence spending rises, revenues are falling. Compared
to 2022, revenues from oil and gas exports will decline by over
20% due to Western sanctions imposed for Russia's invasion of
Ukraine, the IW said.
Russia had a budget deficit of almost 4% of GDP in 2022 and
in 2023 this percentage is likely to increase along with
spending.
Russian still has sufficient reserves, but the future will
be marked by great fiscal uncertainty, IW economists Simon
Iglesias and Melinda Fremerey said.
A Reuters budget analysis published in November showed that
Russia will spend a combined 9.4 trillion roubles ($140 billion)
on defence and security this year alone - nearly a third of the
budget - meaning less money for health, education and research.
($1 = 0.9441 euros)
(Reporting by Klaus Lauer and Maria Martinez)
