Russia's Budget Deficit Widens 40% to 2.8% of GDP; Putin Downplays Risk

Russia's federal budget deficit expanded 40% in H1 2026 to 2.8% of GDP, driven by increased military spending and sanctions pressure. Putin asserts the deficit is manageable, but the widening gap signals fiscal strain amid ongoing conflict. The sustainability of Russia's fiscal position remains uncertain, with implications for its ability to sustain military operations.