Putin promises high wages for scientists and teachers

President Vladimir Putin on Monday unveiled a raft of social spending plans, but warned the Cabinet that overshooting the draft 2006 budget parameters could fuel already high inflation.

Addressing ministers in the Kremlin at the start of parliament's new session, Putin promised higher wages for scientists and teachers as well as increased health payments and import duty breaks for businesses.

The 2006 budget, which was submitted to parliament in August, envisions a 40 percent spending increase, funded from Russia's soaring oil revenues. The budget assumes the oil price will remain high, averaging US$40 per barrel.

But with the price of Russia's key export at nearly US$70 per barrel, Putin warned ministers not to assume high oil prices were eternal.

"We can spend only what we earn," Putin said in televised remarks. "If we take advantage of the external economic situation, which benefits our country, and get stuck for decades in long-term projects ... You all understand or should understand what this means if the situation changes: either we get embroiled in debts ... or sharply and painfully reduce spending."

Overspending could further spike already high inflation and "bury all our good intentions," he said in comments carried by Russian news agencies.

Economists have warned that the budget spending increase marks a dangerous fiscal loosening that does little to diversify Russia's economy and lessen its reliance on oil exports.

Subscribe to Pravda.Ru Telegram channel, Facebook, RSS!

Author`s name Editorial Team