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. Last Updated: 07/27/2016

Russia Plans To Spend Cautiously

Russia will embark on a multibillion-dollar spending program cautiously, to protect its inflation targets, Finance Minister Alexei Kudrin said Tuesday.

President Vladimir Putin announced plans last month to spend 680 billion rubles ($26 billion) in a modernization drive that invited comparison with the heyday of Soviet planning.

Kudrin said the money, which will come from the $114 billion stabilization fund and proceeds from asset sales of Yukos, would be handed out to development institutions as early as this year but spent over the next two to four years.

"This money will not be spent immediately as it would have been dangerous in terms of inflation. It will be spent gradually as projects are being prepared," Kudrin told a meeting with the United Russia party.

The cash will go to four main state institutions -- Bank of Development, Nanotechnology Corporation, Fund for Housing Reform and a venture fund. Nanotechnology is the science of manipulating and enhancing material on an ultra-small scale, used in computing, cosmetics and fuel additives.

Information about the planned development institutions is still scant. Kudrin said cash disbursement would require changes to the 2007 budget, which would be possible only after new institutions get their legal definition.

"At the moment we should concentrate all our efforts on preparing the necessary legislation," Kudrin said, without specifying when the changes would be ready. Kudrin said the 2007 budget surplus, projected at 1.5 trillion rubles ($58.14 billion), was unlikely to grow further despite higher-than-expected revenues from Yukos asset sales and higher international prices for oil.