Putin promises return to haunt Russian budget

(From the KyivPost)

MOSCOW – The easy days are over for Russia. After years of rising oil prices that poured ever more revenues into the nation’s coffers, it now faces tough decisions on spending. A draconian budget plan, due to go before parliament on Friday, symbolizes the new era of austerity. And it raises big questions about how exactly Russia will make its books balance in the years ahead.

President Vladimir Putin has put enormous pressure on the finance ministry’s sums with promises of public spending that aim to quieten domestic opposition and fund Russia’s hosting of events including the soccer World Cup and Winter Olympics.

In a sign of the political tensions that creates, Putin recently rebuked ministers – and by implication his prime minister, Dmitry Medvedev – for failing to draw up a credible budget plan.

“The problem is that we have ourselves limited our expenditures – which is very correct,” Finance Minister Anton Siluanov said at the Reuters Russia Investment Summit this week, “in order to reduce our oil-and-gas dependence.” “On the other hand we have to fulfill the decrees of the president … How can we do all this? Of course it wasn’t at all simple.”

Over recent years, the seemingly boundless oil revenues have enabled Putin to boost spending dramatically, smoothing his re-election to the Kremlin in March – and helping him ride out the first mass protests against his rule. Putin’s pre-election promises, later enshrined in a flurry of decrees, included generous hikes in public sector pay, additional social benefits and regional development programmes.

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