Kremlin planning to spend extra $162bn to raise living standards
In the president's annual address to the Russian Federal Assembly this year, Vladimir Putin urged to upgrade education, healthcare and the quality of urban environment and infrastructure. After his inauguration in May, he is expected to sign a corresponding decree to raise spending on these spheres significantly.
President Vladimir Putin is planning to increase spending on healthcare, education and infrastructure by roughly 10 trillion rubles ($162 billion) in the next six years, reports Bloomberg. The spending plan will provide the fundamentals for the ''decisive breakthrough'' in raising living standards announced by the president in his annual address to the Russian Federal Assembly on 1 March.
Putin is expected to sign a decree formalising the six-year plan just after his inauguration on 7 May. According to Bloomberg's anonymous source, the initial announcement of the plan won't reveal its overall cost as well as details on how it will be financed. Presumably, part of the new spending will be offset with cuts in other sectors, such as gradual reductions in military spending in the next few years. The government is also considering tax hikes, for example, the imposition of a new 4% sales tax, though the decision hasn't been approved yet. The current rise in oil prices may also help the government by pushing the national budget into surplus this year.
The plan, which has been elaborated for several months, has an overall price tag of 10 trillion rubles, said Bloomberg's source, adding that the cost can still be adjusted. Anyway, it will be the biggest government expenditure increase since 2012. The new funding can begin already this year, but the largest spending is expected to follow after 2020.
According to the initial plan, spending on roads and other transport infrastructure could be raised by about a third, while health and education, which have also been underfunded for years, could get extra 20% of spending. That would amount to about 2,3% of GDP per year in addition to actual 9% of GDP that Russia spends on the three areas. The final figures can differ from the preliminary ones. However, on Tuesday, Vladimir Putin's spokesperson Dmitry Peskov dismissed the figures announced by Bloomberg but refused to discuss the document before it was signed.
The new plan is an attempt to kick-start the Russian economy and to get it ''back into high gear amid a slow recovery following the longest recession'' of Putin's rule term, considers Bloomberg. While the president has called for stimulating private business and investment, the measures that are expected to be announced are likely to be state-driven.