TODAY Russia submitted its budget to the Duma, the lower house of the parliament. After three rounds of discussions, Vladimir Putin, the president, will sign it into law. The budget shows how much trouble the Russian economy is in—and how unwilling the government is to face up to reality.

It’s an austere affair: 700 billion roubles ($17.8 billion) of previous spending plans have been axed. New taxes on tobacco and alcohol will probably be imposed. These measures are partly to do with Russia’s poor economic growth, which has crimped tax revenues. The World Bank has cut its forecast for Russian economic growth to 0.3% in 2015 and 0.4% in 2016, down over one percentage point on previous projections. The rouble has lost about 20% of its value against the dollar since October 2013. There are rumours that the central bank will soon enact controls on capital outflows, which in the first quarter were about $50 billion.

But amid the austerity there are some winners. Mr Putin wants to make good on an electoral promise to hike social spending (say, in the form of higher public-sector wages). Defence, with a 20% rise, is another beneficiary. According to Julian Cooper of Birmingham University, this largesse has little to do with the recent Ukraine crisis, but is part of a long-term plan to modernise the military. Spending on defence will rise by 85% between 2012 and 2017.

Then there is the question of oil. In 2015 Russia will need an oil price of about $105 a barrel to balance its budget (see chart). But crude is currently trading in the mid-$90s, down by about 10% since May. Weak demand from China and healthy supply from America help explain the drop.