Russian Prime Minister Dmitry Medvedev said that the country has sufficient resources to meet all its social expenditure, though the going is not expected to be easy owing to the Crimea tensions that are taking a toll on the nation’s economy.
When he was reappointed as a President in 2012, Vladimir Putin promised to do among other things, double the salaries for doctors and teachers before his six-year term is over.
Economists at the Moscow-based Higher School of Economics have estimated that the cost of the extra social expenditure will need about 700 billion rubles ($20 billion), which is around 1.2 to 1.3 percent of the $2.1 trillion Russian economy.
However, the local economy is reeling from the effects of the spending on the annexation of Crimea in March and the associated frosty international relations. The expenses related to annexing Crimea aren’t expected to soar beyond 100 billion rubles ($2.8 billion) in 2014, Putin said recently, according to Reuters.
“We have the resources to fulfill all the social obligations, although the obligations are hard (to implement),” Medvedev was quoted by the Interfax news agency as telling Putin.
Medvedev added on Saturday that authorities had succeeded in maintaining the growth momentum despite the global economic recession. The economy grew at an average rate of 7 percent during Putin’s first two terms in the office as oil prices soared and foreign investment surged due to loose monetary conditions.
Russia’s budget restricts borrowing by the government to 1 percent of the GDP and ties expenditure to the long-term price of oil. The boom in oil prices in 2008 has seen the government try to balance its books around the current prices of at least $100 per barrel. Russia slashed its growth forecasts for this year by more than a half.
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