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. Last Updated: 07/27/2016

Putin Tells Ministers to Resist Temptation

President Vladimir Putin on Monday warned Cabinet ministers and lawmakers against using oil revenues now flooding Russia's budget coffers to finance populist projects and push inflation even higher.

Putin issued the caution to his Cabinet in televised comments, saying the 2006 budget should be "a budget of development, not of squandering."

Record-high world oil prices have led to windfall oil revenues for Russia and its rainy-day stabilization fund. Pressure is growing from some lawmakers and government ministers to use the fund to pay for new programs, such as infrastructure projects.

"I ask you -- both the Cabinet and the [State] Duma -- to take a balanced approach, not to resort to slogans and actions that are attractive to ordinary citizens on the surface, but which in practice could lead to harsh consequences for the whole country and the electorate itself," Putin told ministers.

The stabilization fund currently receives about $3 billion each month from oil duties. Economists warn that the money should be left alone to fulfill its original purposes: keeping the ruble from appreciating against the dollar and paying down foreign debt.

International lending agencies warned earlier in the year that a 12 percent increase in spending envisioned in amendments to the 2005 budget plan and approved last month by a Cabinet committee could spur already-high inflation.

State projects have often turned into black holes for budget cash, and in his address, Putin criticized the huge number of unfinished construction projects from the 1990s.

The bulk of increase in budget spending will go toward increasing civil servant wages and into military sector expenditures, as well as paying for the highly unpopular replacement of certain social benefits with cash, which was introduced earlier this year.