Russia will increase pensions by 6.3 per cent next month, despite protests from Finance Minister Alexei Kudrin that they can’t afford it, according to The Moscow Times. The increase is part of 50% planned growth in pension payouts by year-end.
“We are currently in a situation showing that if we effect an upward adjustment, we shall have to look for another 130-170 billion roubles this year, which would require an increase in the budget deficit or cuts in the programmes regarding all ministries and agencies,” Kudrin said.
In fact, the fiscal action may be illegal, according to RIA-Novosti, as laws governing the pension require high inflation or a surplus for any payout increase.
There’s also the crippling demographic crisis facing Russia, as the pension population grows and the workforce shrinks.
The man writing the budget, however, cares little for distant future and the law. Prime Minister Putin may have more interest in his own popularity, in the run-up to a possible campaign for president in 2012.