"We need to switch over to long-term contracts with arms and equipment suppliers," Vladimir Putin told a meeting devoted to Defense Ministry orders in 2009-2011. "Prices [under such contracts] should be stable."
Putin, who stepped down as president in May to make way for his ally Dmitry Medvedev, acknowledged the impact of growing inflation, which hit 7.7% as of June 1 and is expected to be well above the forecast 10% by the end of the year.
"Inflation is certainly a problem, but there must be no anarchy [relating to defense contracts], and prices must be stable," he said.
"We are in fact talking about the financial basis for the development of our Armed Forces, their modernization and training."
Russia's military spending is expected to total 1 trillion rubles ($43 billion) in 2008, or about 16% of budget spending. The figure represents an increase of 20% from 2007.
Military spending increased by several times during Putin's eight-year presidency, but the army and navy have remained under-equipped since the collapse of the Soviet Union, with experts blaming pervasive corruption and mismanagement in the military ranks.
The Armed Forces have also experienced difficulties with conscription due to harsh conditions, the population's ongoing decline, and other factors.
