Painful Process of Reforming Russian Social Benefits Begins

The reform of social benefits in Russia, which has foreign currency ratings of BB+ and local currency ratings of BBB-, has taken a step forward, with the long-awaited replacement of social benefits in kind with cash payments that came into effect at the start of this year, Standard & Poor’s said in a report “Social Benefits Reform in Russia–A Necessary but Painful Step”. “Although this reform will create significant social, political, and financial pressure on regional governments, we believe that this reform, if it is carried out with due commitment and consideration, will be an important development toward the increased transparency and efficiency of services provision in the public sector,” said Standard & Poor’s credit analyst Boris Kopeykin. One of the primary goals of the reform is to lift the burden of the unfunded, or inadequately funded, social mandates from regional and local enterprises providing various social and communal services to the population.

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