Russia's State Duma passed the 2027-2029 federal budget in the first reading on October 29, with 372 deputies in favour, 51 abstaining and none against, Vedomosti reported.

The draft puts federal revenue next year at RUB43.3 trillion ($536.7bn) and spending at RUB48.7 trillion ($603.6bn), leaving a deficit of RUB5.4 trillion ($66.9bn), or 2.2% of GDP [1]. Revenue is planned to rise to RUB45.8 trillion in 2028 and RUB48.6 trillion in 2029, against spending of RUB51 trillion and RUB53.9 trillion, with the deficit held at 1.9% of GDP in both years [1]. A total of 423 deputies took part in the vote.

Russia's federal budget has been in deficit every year since 2022, and the draft plans more of the same to 2029. Source: Russian Finance Ministry via IntelliNews Lambda; draft 2027-2029 federal budget

The vote clears the way for the second reading, where the money is shared out, on a budget that pays for record military spending with taxes on savers and consumers rather than spending cuts. The government has pencilled in RUB17.1 trillion for defence in 2027, about 35% of all spending, and its tax package moves dividends, deposit interest and other passive income onto the full progressive income tax scale of 13-22%, which business lobbies are trying to soften. The planned 2.2% deficit compares with the 3.2% of GDP, or RUB7.3 trillion, that the Finance Ministry now expects for 2026, twice the 1.6% written into this year's budget law [2].

The tax proposals are aimed first of all at bringing business out of the shadow economy, Finance Minister Anton Siluanov said in an interview with Vesti.

"The tax proposals being considered in their first reading today by State Duma deputies primarily concern work to whiten the economy, and issues related to continuing the policy proposed by the Russian government and supported by parliament regarding the fairness of the tax system," he said.

Proposals from deputies and the cabinet on how resources are allocated will be taken up in the second reading, when appropriations are distributed among the regions and a number of programmes, Siluanov said. He said the draft covers every social obligation in the law. "In any budget, the main task is to find funds to ensure that all indexations and payments stipulated by law are clearly covered by budget funds. This is precisely what the draft financial document states," he said. President Vladimir Putin has also said that the state's social obligations must be met in full, with enough money to improve housing and the well-being of families with children.

Russia's deficit targets have never been met since the full-scale invasion of Ukraine began, and actual spending next year will be set by the situation at the front rather than by official documents, according to Alexandra Prokopenko, a senior fellow at the Carnegie Russia Eurasia Center. The federal deficit reached RUB5.6 trillion ($69.7bn) in 2025, the largest of the war years so far [2].

Siluanov also said the digital ruble, which went into mass use in September, is the future of payments but will not replace the existing forms of the currency. "The digital ruble can also be used for cross-border settlements; this requires the central banks of our counterparty countries to cooperate with each other," he said. The Duma passed a bill on currency transactions in digital rubles in the first reading on October 20.

Russia's 2027-2029 draft federal budget against the 2025 outturn. Source: Russian Finance Ministry via IntelliNews Lambda; draft federal budget law [1], [2]

Sources

[1] Russian government, draft federal law on the federal budget for 2027 and the planning period of 2028 and 2029, submitted to the State Duma on September 30, 2026, passed in the first reading on October 29, 2026

[2] Russian Finance Ministry, federal budget execution, annual outturn 2016-2025; 2026 deficit estimate published September 2026

This article was produced with the help of IntelliNews Lambda analytical tool