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World Bank recommends Russia to raise retirement age

April 07, 9:27 UTC+3 MOSCOW
Raising the retirement age is important to ensure better stability of the budget system and to increase the capacity of the Russian economy, a senior WB economist says
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© Vadim Denisov/TASS

MOSCOW, April 7. /TASS/. The World Bank (WB) urges Russia to raise retirement age, Sergey Ulatov, senior economist at the economics and politics department of WB told TASS.

"The conclusion is unambiguous - definitely it is necessary to raise the retirement age, which is one of the key factors in economic policy. In particular, raising the retirement age is important to ensure better stability of the budget system and to increase the capacity of the Russian economy. That is clearly understood by the government but on the other hand this (measure) will not be popular," the expert said.

He also noted that the World Bank did not make specific assessments of pension reform impact on the budget parameters.

Currently, the World Bank experts are going to analyze the national pension reform and its effects on the Russian economy in the long run.

"Today, the pressure on the budget is very high and in the future it will continue to grow, especially if oil prices remain low. Reserve funds have actually been spent, the only possibility to cover the deficit, including the Pension Fund is by borrowing, which is not the best option for Russia," Ulatov said.

However, he did not rule out that if the sanctions are not lifted, "the cost of borrowing will remain relatively high."

"In addition, there is another aspect of pension reform. It concerns long-term savings and the financing of investment projects as well as public discussion about the cumulative part of the pension, and how this money should be spent. The country needs long money," the expert concluded.

Earlier, in its report, the World Bank downgraded the outlook on the dynamics of Russia's GDP. In 2016, Russia’s GDP is expected to decline by 1.9%, 2017 may see its growth in the range of 1.1%. Average inflation rate, according to World Bank data, in Russia will amount to 7.6% I 2016 and 4.8% in 2017.

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