Putin says he will cut military spending amid recession warnings - Telegraph
Kyiv • UNN
Vladimir Putin has announced cuts to military spending for the next three years after Kremlin officials warned Russia was on the verge of recession. This also comes amid record interest rates and inflation in the country.
Russian dictator Vladimir Putin announced plans to cut military spending after Kremlin officials warned that the aggressor state was "on the brink of recession." This was reported by The Telegraph, writes UNN.
Details
On Friday, at an economic summit of five post-Soviet states in Minsk, the Kremlin leader, as stated, announced that he would cut defense spending "next year and the year after, for the next three-year period."
Responding to NATO's plans to increase defense spending to 5% of GDP, Putin said that Alliance members would spend funds on "purchases from the US and supporting their military-industrial complex."
"So who is preparing for some aggressive actions? Us or them?" he added.
These comments came after Russia's Minister of Economic Development, Maxim Reshetnikov, announced last week that the country was "on the brink of recession."
Elvira Nabiullina, head of the Central Bank of Russia, also warned that the country's wartime economic momentum, driven by huge state spending on the defense sector, was stalling. "We have been growing for two years at a fairly high rate because free resources were activated. We need to understand that many of these resources are indeed exhausted," she said.
In 2024, the Russian economy grew by 4.3%, however, in an attempt to curb rampant inflation, interest rates have been kept at an impressive 21% since October, and were slightly reduced to 20% this month as pressure eased somewhat.
Inflation, it is noted, was largely driven by sanctions, which led to an increase in import costs. Wage growth also soared to a 16-year high due to labor shortages caused by the transfer of workers to the defense sector and the army.
The Moscow Higher School of Economics estimated that the labor shortage was 2.6 million at the end of 2024.
The Kremlin also offered high wages and generous entry bonuses for soldiers, trying to replenish the ranks at the front. Although the military-industrial complex, as stated, benefited from increased government spending, private sector industries suffered from declining demand, rising costs, and high debt due to exorbitant interest rates.
Russian banking officials privately warned of the risk of a crisis within the next year due to an increasing number of businesses unable to make loan payments, Bloomberg reported.
Future spending may include the reintegration of war veterans from the war against Ukraine. Of nearly 140,000 Russian soldiers who have returned to civilian life, half are reportedly still unemployed.
However, Putin last week at the St. Petersburg International Economic Forum dismissed claims that the Russian economy was failing.
He said: "As for the 'killing' of the Russian economy, as a famous writer once said, 'the rumors of my death are greatly exaggerated.'"
Addition
Putin stated his readiness for contacts with Donald Trump, expressing respect for his initiatives to settle the war in Ukraine. The Kremlin emphasizes the sincerity of Trump's efforts and is open to negotiations.