In 2023, the Russian government plans to spend $84 billion on defense — 40% more than expected.
On November 16, Russia held the largest ever issue of securities in one day, raising 820 billion rubles ($13.6 billion). The UK Ministry of Defense explained the significance of this policy move on its Twitter page.
The issue of securities is the issue of bonds, shares or other documents by the government, which are sold to external investors to attract funds to the state budget. In this case, the country becomes the debtor of these investors and undertakes to pay interest on the invested money.
As the Ministry of Defense of Great Britain explains, this step is very important for Russia, because the issuance of bonds and debt obligations is a key mechanism for covering defense costs, which have increased significantly due to the war in Ukraine. The Russian government has planned spending on “national defense” in 2023 at the level of 5 trillion rubles ($84 billion), which is more than 40% higher than the previous budget for 2023, announced in 2021.
Issuing government bonds is expensive in volatile times. As British experts assume, such a large volume of debt obligations indicates that the Ministry of Finance of Russia considers today’s conditions quite favorable for investments, but is preparing for an uncertain tax-budget situation next year.
Earlier it was stated that Russia did not pay interest on credit bonds. Investors demanded payment of interest on payments from Eurobonds in the amount of $1.9 million, which have long been overdue. Due to this, the Russians came close to declaring default.