Russia should look at areas in its current budget where it can make cuts rather than raise overall spending to pay for pension increases, an International Monetary Fund spokesman said on Wednesday. Protests, mainly by the elderly, against the scrapping of benefits like free medicine and public transport in return for small cash payments, forced the government to raise pensions in a package costing 105 billion roubles ($3.75 billion).
"Given what is still relatively high inflation and tight conditions in some of the Russian labour markets, it would not be advisable to expand overall government spending and therefore the underlying fiscal deficit," IMF spokesman Thomas Dawson told a regular news briefing.
Russian Finance Minister Alexei Kudrin said last week the costs of the increase would be covered from normal budget receipts and will not come from oil revenues stashed in a stabilisation fund.
The government dipped into the stabilisation fund this week to pay off $3.33 billion of its remaining debt to the IMF ahead of schedule.
Dawson said the IMF welcomed the general thrust of pension reforms since they replaced benefits that were "not transparent, poorly targeted and quite expensive."
"Payment in cash, which is standard for federal benefits, should help improve efficiency and transparency of social spending," Dawson added.