Economic Growth Slows Down, Russia Cuts Its Military Budget Next Year

JAKARTA - President Vladimir Putin said Russia plans to cut its military spending starting next year.

Conditions are different from NATO's plan to increase defense spending over the next decade.

NATO allies agreed on Wednesday to raise their collective spending target to 5% of gross domestic product in the next 10 years. The increase in the budget is due to long-term threats posed by Russia and the need to strengthen civilian and military resilience.

Responding to the move, Putin said NATO spending would be used for purchases from the US. The move is called NAT's business, not Russia's.

"But now this is the most important thing. We plan to reduce defense spending. For us, next year and the following year, over the next three years, we plan this," Putin said.

Putin said there was no final agreement between the defense, financial and economic ministries.

"But overall, everyone thinks in this direction. And Europe thinks about how to increase its spending, on the other hand. So who is preparing for some kind of aggressive action? We or them?," he continued.

Currently the Russian-Ukraine war shows no signs of ending and is even more intensive in recent weeks, as negotiations show no real progress towards a ceasefire.

Putin said Russia appreciates US President Donald Trump's efforts to end the war.

"Recently he stated that it turned out that the war was more difficult than it could be seen from outside. Yes, that's true," Putin said.

Trump said he believed Putin wanted to find a way to resolve the conflict, but Ukraine and many of its European allies believed the Kremlin leader had no real interest in the peace treaty and intended to seize more territory.

Russia is reportedly experiencing a sharp slowdown in economic growth as the budget is under pressure from a decline in energy revenue and the central bank is trying to reduce inflation.

Russia raised state spending for national defense by a quarter by 2025 to 6.3% of gross domestic product (GDP), the highest level since the Cold War. Defense spending reached 32% of the total federal budget expenditure by 2025.

The defense plant has been operating around the clock over the past few years.

The state has spent a lot of money on bonuses to attract soldiers to register and to compensate their families for the killed.

Putin acknowledged Russia had paid for an increase in military spending with higher inflation.

The Ministry of Finance raised the estimated 2025 budget deficit to 1.7% of gross domestic product in April from 0.5% after reducing energy revenue forecasts by 24%, and plans to take advantage of this year's fiscal reserves to balance the budget.

The next budget draft will appear in the fall.