Lavish social spending promised by Prime Minister Vladimir Putin in his bid to return to the presidency will cost the federal budget at least 5.1 trillion rubles ($170 billion), the Central Bank said.
The list includes wage hikes for healthcare professionals, school teachers and college professors, as well as increased child support, bigger student stipends and more funding to provide housing to war veterans, according to a report by the Central Bank’s macroeconomic experts, cited by Vedomosti on Friday.
The spending is to grow throughout the next six years, which is the new duration of a presidential term. Putin, who was president in 2000-2008, expects to get the Kremlin job back at the elections in March despite mounting anti-government sentiment.
Putin’s list of social promises, outlined in an article in Komsomolskaya Pravda on Monday, is quite extensive, but many of them, such as curbing alcoholism in the country, are too vague to allow for financial estimates, the report said.
The planned spending is modest compared to the government’s other financial plans, the crown jewel among which is the 20 trillion rubles earmarked for the military through 2020.
But the plan can still result in budget deficit of 0.5 to 1.5 percent if oil prices slide under $95 from last year’s $109 per barrel, the Central Bank experts said. Analyst Yulia Tseplyayeva of BNP Paribas said the deficit can reach up to 3 percent of the state budget if Putin’s campaign promises voiced in four earlier articles are factored in.
Former Finance Minister Alexei Kudrin, ousted last year by President Dmitry Medvedev over criticizing his military spending plans, said in October that the government will need 20 trillion rubles to pay for all its pension and salary hike plans.