More trading with new partners
Putin announces higher pensions and wages
12/15/2022, 6:16 p.m
Shortly before Christmas, Russia’s head of state promises an expansion of social benefits. Pensioners and low-income earners in particular should benefit. On television he speaks of “objective difficulties” in the current year. Hopes rest on China.
Russian President Vladimir Putin has promised the population higher wages and pensions, regardless of Western sanctions and the Ukraine war. In a televised speech, he announced that Russia would expand economic ties with partners in Asia, Africa and South America to counter the West’s attempt to isolate it economically. Obstacles in logistics and finance are to be dismantled. More natural gas will be sold to “the East” and a distribution center will be set up in Turkey, Putin said. This will determine natural gas prices for Europe with the help of an electronic platform.
“Despite the objective difficulties of the current year, we will achieve positive results in the fight against poverty,” Putin said. This development must be continued in the coming year. The minimum wage must rise faster than inflation. Putin admitted that the economy is likely to shrink by 2.5 percent this year. For the coming years, however, he promised an increase in natural gas sales to China. With the help of new pipeline projects, the corresponding annual volume should increase to 88 billion cubic meters by 2030. Last year it was ten billion cubic meters.
In a later televised meeting with authorities, Putin also announced that government construction subsidies would be extended by 18 months until July 2024. The preferential interest rate will rise from seven to eight percent, but families with at least two children should receive six percent. According to an index by the financial service provider Banki.ru, the annual mortgage interest rate in Russia is just under 10.5 percent. Putin proposed an interest rate of 2 percent for the four regions in Ukraine that Russia declared its own territory – the “new territories” in official parlance.
Experts had warned that the end of government support could hit the Russian construction sector massively. This is already heavily burdened by the partial mobilization in September and the resulting shortage of workers as well as a general decline in demand. According to earlier reports, Russia intends to spend almost a third of its budget on defense and internal security in the coming year. Funds for education, health care and roads, on the other hand, are to be cut.