Russia increases pensions ahead of elections

Russia is increasing pensions - and can afford it, given its low government debt. A few weeks before the elections, the Russian government approved an increase in pensions. The state will increase spending by more than 470 billion rubles in spending (6.5 billion euros), Russian Prime Minister Dmitry Medvedev announced last week at a government meeting.

The increase in pensions will help nearly 43 million retirees cope with rising prices. Elections to the new parliament will be held on September 18. Pensioners, who make up about a third of the population, voted predominantly for President Vladimir Putin and his United Russia party in previous elections.

Raising pensions will put an even greater burden on the already deformed state budget: the volume corresponds to almost three percent of total spending in the coming year. Government revenues have shrunk in recent years due to the recession, falling oil prices and sluggish privatization. In the first half of this year, they were 11 percent below the plan. Therefore, Russia could increase the federal budget deficit by more than three percent over economic output and thus miss the target, as Medvedev noted.