The world Bank has estimated the cost of the Russian budget on defence and housing

© Fotolia / KkolosovДеньги. Archival photoThe world Bank has estimated the cost of the Russian budget on defence and housing© Fotolia / Kkolosov

Russia spends more than any other country on defense and housing, and less social protection, education and health, says the world Bank report on the Russian economy released Tuesday.

«The level of expenditures of the enlarged government of Russia, which in 2015 is approximately 35% of GDP, far below the average spending in OECD countries (45% of GDP) and the EU-28 (48% of GDP). It only exceeds the level of expenditures of the enlarged government of Ireland (29,4% GDP) and Switzerland (33,9% of GDP). Breakdown of expenditure by function shows that other countries spend more on social sector — social protection, education and healthcare and less on defense and housing and communal services», — the document says.

The authors of the report noted that the current law on the budget of the Russian Federation and the government approved amendments aimed at ensuring a gradual fiscal consolidation. «It is planned to reduce the budget deficit to 1.2% of GDP in 2019, which virtually will lead the budget in accordance with fiscal rule based on a base cut-off price of $ 40 per barrel, which is currently being considered by the government», — stated in the document.

The result of the initial expenditures of the Federal budget by 2019, compared with the year 2016 should be reduced by about 7% in real terms, or 3.6% of GDP, and this reduction is almost evenly distributed across all categories of expenditure. «The most significant reduction is expected in categories such as national defense, national economy and housing and communal services», — stated in the review.

«By 2019, the reduction of expenses on social policy will be 2.5% in real terms compared with the year 2016, which will require improving the targeting of these costs,» say analysts at the world Bank.

The document also notes that in 2017-2019 years the Russian government plans to attract additional incomes in the budget in the amount of 1.1% of GDP – primarily due to the receipt of dividends from companies controlled by the state, and increasing tax revenues from the energy sector.