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STOCKHOLM SCHOOL
OF ECONOMICS

New report | Behind the budget: Hidden spending and financial fragility in Russia

17 April, 2025
As part of its ongoing research on the economic consequences of Russia’s full-scale invasion of Ukraine, the Stockholm Institute of Transition Economics (SITE) has presented a new report to Sweden’s Minister of Finance. The report provides updated insights into the growing imbalances in the Russian war economy and the financial challenges the government faces in sustaining its current level of military spending.

On April 17, 2025, SITE presented its latest report, Financing the Russian War Economy, to Sweden’s Minister of Finance, Elisabeth Svantesson. This report builds on SITE’s earlier analysis, presented in fall 2024, and offers an updated assessment of the economic strains emerging within Russia’s wartime economy.

The new report highlights a sharp increase in off-budget military spending, which significantly exceeds what is captured in official statistics. As a result, the true cost of the war—both in terms of actual expenditures and future financial liabilities—is far greater than what appears in the government's budget or debt figures.

Much of Russia’s economic data is now tightly controlled or simply not published. Trying to map out the real inflation rate or level of indebtedness is like piecing together a puzzle with missing parts—but it is clear that macroeconomic and financial imbalances in Russia have grown since last autumn.
Torbjörn Becker
Director of SITE

With oil prices declining and fiscal reserves nearing depletion, Russia faces mounting pressure to address growing macroeconomic and financial imbalances. If current levels of military spending persist, the government will soon be confronted with difficult policy trade-offs to stabilize the economy.

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This report was written by a , affiliated with the Stockholm School of Economics (SSE).

About SITE

SITE was set up as a research institute at the Stockholm School of Economics (SSE) in 1989 with the mandate of studying developments in the Soviet Union and Eastern Europe. Today, SITE is a leading research-based policy institute on these issues. SITE has also built a network of research institutes in the region () that includes the Kyiv School of Economics (KSE). KSE not only provides a premier economics education to future leaders in Ukraine but is also involved in the analysis of the Ukrainian, as well as the Russian, economy, including analysis of the role of sanctions in limiting Russia’s destructive capacity. KSE has been an important contributor of data and analysis that underlies this report.

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