Financing the Russian War Economy: SITE Presents New Report on Russia’s Wartime Economy
The Stockholm Institute of Transition Economics (SITE) has released a new policy report analyzing how the Kremlin finances its war efforts under growing economic pressure. The report, titled “Financing the Russian War Economy”, was presented to Sweden’s Minister of Finance, Elisabeth Svantesson, on April 17, 2025.
This new publication builds on SITE’s 2024 report, The Russian Economy in the Fog of War. It offers updated insights into the financial structure behind Russia’s wartime economy. Notably, it highlights the sharp rise in off-budget military spending. Consequently, SITE argues that the real cost of financing the Russian war far exceeds official data.
Key Insights: How Russia Is Financing the War
The report identifies four major developments in Russia’s war financing strategy:
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Off-budget expenditures: A significant share of military spending flows through state-owned enterprises and regional programs, bypassing the federal budget.
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Depleting fiscal reserves: While oil prices continue to fall, Russia’s financial buffers are shrinking at a rapid pace.
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Hidden liabilities: SITE stresses that true financial obligations—especially future costs—remain largely unaccounted for in government figures.
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Economic instability: Sustained military spending, without major adjustments, may soon trigger painful policy trade-offs.
As a result, SITE warns of growing risks. These include deeper financial imbalances, limited fiscal flexibility, and long-term damage to Russia’s economic stability. Moreover, the report reveals how Russia’s financing model has become increasingly opaque, masking the true scale of war-related expenses.
Read More
- Read the full report “Financing the Russian War Economy” (2025)
- Related: The Russian Economy in the Fog of War (2024)
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 (FREE Network) 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 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 underlie this report.