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Russia budget cuts threaten long-term economic prospects
Shoaib Ur Rehman
03 Dec, 2014
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Copyright Reuters, 2014
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![](https://i.brecorder.com/images/2014/12/russia-flag.jpg">MOSCOW: As Russia grapples with the impact of plunging energy prices and a contracting economy on its government finances, painful cuts in state spending have become unavoidable. </P><P>But rather than touch sizeable defence and social expenditures backed by President Vladimir Putin, the axe is most likely to fall on infrastructure projects that are important for reviving long-term economic growth, analysts say. </P><P>The 30 percent slide in oil prices has blown a huge hole in state finances, forcing Finance Minister Anton Siluanov to admit last month that revenues, half of which come from energy taxes, could fall about a trillion roubles ($180 billion) next year.</P><P>The central bank spent $700 million to help the rouble on Monday, even though the currency was last month allowed to float freely. The finance ministry denied it would impose capital controls despite the rouble hitting new lows against the dollar. </P><P>The economy drive has started at the top: Putin has already ordered a freeze on Kremlin officials' salaries next year. But fearful of provoking unrest, or looking weak internationally, the Russian leader seems reluctant to cut the very areas of spending which many analysts say are the most obvious candidates for fat-trimming.</P><P>)
