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Russian Government Weighs Hike In Social Spending

Kremlin economic adviser Andrei Belousov (file photo)
Kremlin economic adviser Andrei Belousov (file photo)

Kremlin economic aide Andrei Belousov has said that the Russian government is considering a possible boost in social spending, as President Vladimir Putin steps up his campaign for the March presidential election.

Belousov said on January 16 that expenditures on health, education, and infrastructure could be raised by 1.5-2 percent of gross domestic product (GDP), according to the TASS news agency.

Expenditures on the three currently amount to about 9 percent of GDP.

Spending cuts in other areas, tax increases, and the "optimization" of taxes were among the options being considered to free up funds, Belousov said, adding that no final decision has been made.

Meanwhile, former Finance Minister Aleksei Kudrin, who is reportedly on close terms with Putin, tweeted that "consensus is emerging about the need to seriously increase spending on education, health, and infrastructure."

The move will have a "long-term positive effect for the country," Kudrin added.

If it materializes, the boost in social spending would start to take effect in late 2018, Bloomberg quoted two people familiar with the plan as saying.

The debate comes as Putin is widely expected to win a fourth presidential term in the March 18 election.

Analysts say Putin is eager to score a strong win with a high turnout in the polls to make his mandate as strong as possible in what could be his final term, as the constitution bars presidents from serving more than two consecutive terms.

Last week, the Russian president announced that the minimum wage would be raised on May 1, adding that the change would affect "about 4 million people."

The hike had previously been expected to come later in the year.

The minimum wage in Russia is 9,489 rubles a month ($166).

Official figures show that more than 20.3 million Russians are living under the poverty line.

With reporting by AP and Bloomberg
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