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Russia’s government promises prosperity by the year 2030

January 31, 2013, 11:29 UTC+3

Russia’s ministry of economic development on Wednesday made public a report, which promises to at least double monthly wages and triple retirement benefits

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Russia’s ministry of economic development on Wednesday made public a report, which promises to at least double monthly wages and triple retirement benefits. Thus, the ministry predicted, that living standards in Russia will be on a par with those in the European Union. Experts however say such optimism is based on nothing.

The ministry presented its view on Russia’s socio-economic development till the year 2030, writes the Rossiiskaya Gazeta daily. The ministry’s forecast traditionally outlines three possible scenarios of the development of Russia’s economy. The three differ in how much money the state plans to spend to support the economic growth. In case of the hyped-up scenario, monthly wages may easily reach an equivalent of 4,400 U.S. dollars. The innovation scenario provides for monthly wages of 3,100 U.S. dollars, and the conservative one – 2,500 U.S. dollars only. Whatever bright it might seem, the hyped-up scenario has its drawbacks as well, the ministry admitted. Macroeconomic stability will be compromised on in order to spur up economic development.

The Novye Izvestia newspaper carries a feature entitled “We are going to heap up riches, if live that long.” According to government officials, the well-being will be improved through the modernization of the economy, the improvement of the investment climate, and the development of labor productivity – in other words, through what the authorities have been speaking about for years, with no avail, as matter of fact, the newspaper writes. The country is still dependent on exports of energy sources, its industrial development is slowing down, and capital is draining from the country, despite the Central Bank’s statements. However, while making its forecast, the ministry of economic development might have taken into account the new pension reform placing the entire responsibility for pension savings on each future pensioner. It looks like the predicted wage growth in this case stems from the reduction of employable population.

Experts say such optimistic long-term forecasts take no account of potential economic risks, such as possible drop of oil prices or new waves of global recession.

“The approach of the ministry of economic development is quite clear. They simply multiplied annual economic and wage growth by 17 years, says analyst Anatoly Voronin. “But practice shows that not a single country can tell absolutely precisely how its GDP might change. Russia is facing serious risks that can tell negatively on the predicted economic growth. For instance, mass refusals to use Russian gas, even by Russia’s closest neighbors. Moreover, the United States is close to energy independence, a fact that might change considerably the economic situation in the entire world. Accelerated growth of pension benefits relative to salaries in the background of shrinking share of gainfully occupied population might cause a problem as well.” The expert finds the government’s promises of prosperity for pensioners hardly ever believable. “The government has decided to give up the existing pension system but failed to create a new one. More to it, no one can tell whether it works,” he told the Novye Izvestia. “So, the pension base will be shrinking, while the need to increase benefits will be augmenting. It is not good and looks like a financial pyramid.”

According to Alexander Vilansky of the Institute of the Economy of the Russian Academy of Sciences, corruption will reduce whatever brilliant plans to nil, the Komsomolskaya Pravda newspaper writes. “The main thing is to build an adequate court system. Nowadays, judges in Russia have formed a kind of an independent caste – their writs cannot be cancelled even by superior instances – one hand washes the other, indeed,” he said. “No economic progress is possible as long as a businessman is held guilty towards a state official.”







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