September 9, 2016 / 2:41 PM / 3 years ago

UPDATE 1-Russian ministry wants defence spending cut, Putin resists

(Recasts after Putin comments)

By Darya Korsunskaya

MOSCOW, Sept 9 (Reuters) - Russia’s finance ministry wants to cut defence spending over 2017-19 by 6 percent from this year’s level, a government source told Reuters on Friday, but President Vladimir Putin said it was important to stick to what had been agreed earlier.

Differences on defence expenditure are part of an ongoing battle over Russian spending priorities as weak oil prices and Western sanctions over the Ukraine conflict hurt the economy and spur a budget deficit.

The finance ministry wants to reduce defence expenditures as part of a broader 6 percent cut to government spending, the government source said.

The proposed spending cuts would not affect the salaries of state sector employees or payments to the population such as pensions, the government source said, adding the proposals were still under discussion and could change.

The finance ministry has come up against strong opposition from the defence ministry and security services when it has sought to cut outlays on defence in the past.

Putin told a cabinet meeting on Friday: “All budget responsibilities and plans which we took on earlier in the sphere of defence and security of the government should be, without question, fulfilled.”

“The continuity of the current and new programme should be ensured,” the Russian leader said, referring to a current state rearmament programme and another planned over 2018-2025.

The finance ministry wants to limit the budget deficit to 3.2 percent of gross domestic product this year, before cutting the deficit by 1 percentage point annually.

It is aiming to keep annual state spending at 15.79 trillion roubles ($245.94 billion) over the 2017-2019 period.

The government source told Reuters the ministry is also proposing extending a freeze in pay increases for state employees for another three years.

The pay freeze was introduced at the start of this year and was to have run for one year, although the salaries of public sector professions such as teaching and healthcare were excluded.

With annual inflation running at 6.9 percent in August, the pay freeze entails significant declines in real wages for certain state employees. ($1 = 64.1900 roubles) (Writing by Alexander Winning and Lidia Kelly; Editing by Christian Lowe and Jon Boyle)

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