Moscow plans to spend more while collecting almost no additional revenue in 2027, pushing the capital’s budget deficit to 651bn roubles. The gap, up from an estimated 448bn roubles this year, comes as corporate profit-tax receipts are expected to fall sharply and eight of the city’s 13 main programmes face spending reductions.
Mayor Sergei Sobyanin submitted the three-year budget plan, covering 2027 and projections for 2028 and 2029, to the Moscow City Duma on 26 October 2026. The figures show Russia’s wealthiest region with less room to absorb rising costs, weaker business profits and responsibilities connected to the country’s prolonged war.
Revenue stands still as spending rises
Moscow’s expenditure is forecast to rise by 3.2% in nominal terms next year, reaching 6.59tn roubles. Revenue, by contrast, is projected at 5.93797tn roubles, barely above the 5.93743tn roubles forecast for 2026.
That increase of roughly 0.01% offers no meaningful additional capacity once inflation is taken into account. The result is a widening gap between what the city expects to collect and what it plans to spend: 651bn roubles in 2027, compared with 448bn roubles in 2026.
More than 90% of Moscow’s budget revenue normally comes from taxation. The draft puts tax receipts at 5.3805tn roubles next year, 22.5bn roubles below the 2026 forecast. The city intends to make greater use of non-tax income, including interest from bank deposits and the management of balances held in its unified account, fines and penalties, and the sale of material assets. Those sources brought in 534bn roubles in 2026.
Such income can provide temporary support, but it is not a direct substitute for a growing tax base. Interest earnings depend on available cash and market rates; asset sales cannot be repeated indefinitely; and fines do not indicate stronger economic activity. Their increased importance points to pressure on Moscow’s regular sources of revenue.
Corporate profits provide the sharpest warning
The largest projected fall is in profit tax. Moscow’s authorities expect receipts from this source to decline by more than 300bn roubles, or over 15%.
The capital is home to the headquarters of major Russian companies in oil and gas, metals and finance. Their profits may be affected by international sanctions, changed export markets, higher logistics costs, difficulties in obtaining equipment and expensive borrowing. Additional taxes or export duties imposed at federal level may also redirect part of the corporate tax burden away from the city.
The budget figures do not identify one cause or quantify the contribution of each factor. They do, however, show that a key source of Moscow’s fiscal strength is weakening at the same time as expenditure continues to rise. If large taxpayers make smaller profits, or if more of their income is collected by the federal government, less reaches the city budget.
Personal income-tax receipts are expected to increase, but broadly only in line with official inflation. In real terms, that would create little extra spending capacity. Moscow would consequently rely more heavily on employment and nominal wage growth while receiving less support from corporate profitability.
War-related responsibilities add to the squeeze
The budget pressure is developing alongside the additional obligations that Russian regions have assumed during the prolonged war. These include payments linked to contract military service, purchases of equipment and contributions to infrastructure work in territories supported by Moscow.
The available budget figures do not separate those costs clearly enough to establish how much of the projected deficit they directly create. Nor does the draft, as presented, allow the entire increase in the shortfall to be attributed to them. The clearer fiscal picture is the combination of rising total expenditure, slightly lower tax receipts and almost flat overall revenue.
That combination is already forcing choices. Spending is due to fall across eight of the city’s 13 programmes, including education, the urban environment, transport, culture, tourism, sport and urban-planning policy.
The proposal does not mean every service in those areas will be cut by the same amount, or that individual projects will necessarily be cancelled. It identifies the fields in which Moscow plans to reduce expenditure compared with earlier plans. For a city with a broader tax base than most Russian regions, the move marks a visible narrowing of its policy options.
Borrowing could turn a gap into a longer-term burden
The 651bn-rouble shortfall will have to be financed through some combination of existing funds, asset sales and new borrowing. Moscow may turn to the domestic market and issue city bonds, although the figures available do not yet set out the full financing mix.
The cost of borrowing will matter. Under tight monetary conditions, high interest rates would make new debt more expensive and increase the cost of servicing it in later years. A larger share of future revenue could then go towards interest and repayments rather than transport, education, infrastructure or social services.
The deficit does not, by itself, amount to an immediate solvency crisis. Moscow remains Russia’s main economic and financial centre and has more fiscal instruments than most other regions. But the capital’s financial cushion is becoming less comfortable: business-profit tax is falling, overall revenue is barely moving and spending commitments are growing.
The decisive issue in 2027 will be how the city distributes the cost of that pressure. If taxable profits continue to weaken while household tax receipts merely keep pace with inflation, Moscow will have to rely more heavily on debt, make deeper reductions to municipal programmes or seek greater flexibility from federal tax policy.
