Russia to cut back on social spending in favor of defense, police and state banks
The Russian Finance Ministry published draft amendments to the federal budget for 2018, in which it, for the second time in the last 6 months, proposes to reduce expenditure on the social articles and to increase funding for the law enforcement and defense departments, state organizations and state banks, finanz.ru reports.
Due to the spike in oil prices and the weak ruble, the budget surplus is five times higher than the initial prediction, at 2.14 trillion rubles instead of the pledged 481.7 billion, according to an article on Russia’s official legal information portal.
The treasury’s unexpected additional revenue (from oil above $40 per barrel) is in excess of 4 trillion rubles. Expenditure is increasing for the majority of the key articles, with two exceptions: social policy and healthcare.
The Finance Ministry has decided to reduce the federal budget’s social expenditure by 34.9 billion rubles, including a 1.6 billion cut on pension expenditure, and also to dock 7.9 billion rubles off the budget for “Citizens’ Social Support”, 2 billion from support for injured soldiers and 7.7 billion from unemployment grants.
Federal financing of medicine will be reduced by 3.3 billion rubles, and the state “healthcare development” program by 2.7 billion.
The allocation for national defense, on the other hand, will be raised by 9.5 billion rubles, and the funding for national security (police, investigative organs) by 9.9 billion. This will include 1.7 billion for the Russian National Guard and 1.8 billion for the Interior Ministry.
A drastic increase in expenditure – 83 billion rubles – is planned for the article “national economy”, 80% of which will go into capital injections for state banks and Russian Railways. The transport monopoly will receive 22 billion from the budget, and Vnesheconombank will be given 25.5 billion to repay foreign debt. 20 billion will go to Russian Agricultural Bank and Promsvyazbank.
An even larger portion of the budget will go to filling in the budget “holes” of the federation’s subjects: 114 billion rubles.
Over the next three years, Russia’s budget will continue to bolster its bias towards defense and security. By 2021, the expenditure on the “classified” articles will increase by one third, from 3 to 4.1 trillion rubles. The funding for security agencies will grow by a similar amount: from 5.14 trillion in 2018 to 6.64 trillion by 2021.