Russia has pushed its military and security spending to levels unseen since the Soviet era, allocating an unprecedented $183 billion in 2025 - consuming 41 percent of the entire state budget. The figure, highlighted in a new PISM report on Baltic Sea Region security, reflects a dramatic escalation from $61 billion in 2020, $65 billion in 2021, $82 billion in 2022, and $109 billion in 2023.
As "Hvylya" reports, citing the Polish Institute of International Affairs analysis, these expenditure levels are expected to "remain at a similar level" through 2026-2028, indicating that Russia's leadership views the current military buildup as a long-term commitment rather than a temporary wartime measure. The PISM researchers explicitly warn that "a cessation of fighting in Ukraine is unlikely to lead to a slowdown in arms production."
The spending has translated into tangible military-industrial output. Russia managed to increase its production of artillery ammunition to over 7 million rounds per year by 2025 - more than seventeen times the pre-invasion level of 400,000 rounds annually. This production surge has reduced Moscow's dependence on ammunition supplies from North Korea and Iran, from which Russia obtained an estimated 5 to 7 million units since 2023.
The report flags an additional risk factor: the prospect of Western sanctions being lifted, which Russia is actively pursuing in its negotiations with the United States. Relief from sanctions would provide a boost to Russia's economy, "currently in a state of stagnation," allowing Moscow to expand military production capacity further. The PISM analysts assess this would directly "heighten the risk of direct confrontation with NATO."
All Baltic Sea Region countries have responded by increasing their own defense budgets, with several now spending well above NATO's traditional 2 percent guideline. Poland leads at 4.48 percent of GDP, followed by Lithuania at 4 percent, Latvia at 3.73 percent, Estonia at 3.38 percent, and Denmark at 3.22 percent. At the 2025 Hague summit, NATO members committed to reaching 5 percent of GDP on defense.
Despite these increases, the PISM report makes clear that Russia's defense-industrial momentum creates a structural challenge. Even if the war in Ukraine ends, Moscow will possess a vastly expanded military production base, trained workforce, and rebuilt stockpiles designed not merely for sustaining operations in Ukraine but for preparing what Estonian intelligence characterizes as "another war."
Also read: Russia Reaps Energy Windfall as Iran Burns, Carnegie Analysts Say.