Russia ramps up war spending as Bulgaria hikes debt to fund defense

Russia’s war spending surge and Bulgaria’s debt hike underscore Europe’s shifting fiscal landscape as governments scramble to fund military and economic priorities amid geopolitical turbulence. On 18 June 2026, Bloomberg reported that Moscow plans to raise military expenditure by an additional 4–5 trillion rubles in 2026, a move that deepens the Kremlin’s reliance on deficit financing to sustain its war effort in Ukraine . The announcement follows three months during which US sanctions exemptions on Russian oil generated more than $2 billion in extra revenue, according to Ukrainian state media .

In Sofia, Bulgaria’s parliament on the same day authorised a €3.8 billion increase in public debt to finance the 2026 budget, a decision that reflects broader European efforts to balance defence modernisation with fiscal sustainability . The borrowing spree coincides with a surge in the global deep-strike loitering munition market, which has tripled to $13.8 billion over three years as European states prioritise long-range strike capabilities amid heightened security threats .

Analysts warn that the combined fiscal pressures—Russia’s war chest and Bulgaria’s debt expansion—signal a new phase of European defence financing, where governments are increasingly willing to leverage sovereign borrowing and reallocate resources to military needs. The Kremlin’s additional 4–5 trillion ruble allocation, equivalent to roughly 3% of Russia’s 2025 GDP, underscores the scale of the mobilisation, while Bulgaria’s €3.8 billion debt hike, representing about 6% of its projected 2026 GDP, highlights the fiscal strain on smaller EU economies .

The revenue from sanctioned Russian oil, earned between 12 March and 18 June 2026, has provided a temporary cushion for Moscow’s war economy, complicating Western efforts to curtail Kremlin funding through sanctions . Meanwhile, the booming loitering munition sector, valued at $13.8 billion in 2026, reflects Europe’s pivot toward high-tech, long-range strike systems as it adapts to the realities of a prolonged security crisis .

With both Russia and Bulgaria expanding their fiscal commitments, the coming months will test the resilience of European budgets and the durability of Western sanctions regimes in an era of sustained geopolitical confrontation.