Russia will raise pensions by 46% next year, as part of a boost in government spending. Prime Minister Vladimir Putin announced the move at a cabinet meeting on Wednesday.
The Russian Prime Minister also earmarked 1.9 trillion Roubles – that's around $63 billion – for infrastructure projects and modernizing the economy. The government says the economy will start growing again in 2010 after shrinking this year at the fastest rate in a decade, forecasting GDP growth of 1.6 percent next year.
Despite the announcements of increase expenditure the Prime Minister emphasized that fiscal prudence remains a key priority and that the budget deficit will be halved between the end of this year and 2012.
“Our main goal for budgetary policy in the near future is to ensure macroeconomic stability and the continuing decrease of our budget deficit. By the end of 2009 our deficit will be 3.2 trillion Roubles. By 2012 we should halve the deficit to 1.6 trillion Roubles. Any additional income that we get, will be, first of all, sent to cover the budget deficit.”