September 19, 2015 / 1:42 PM / 4 years ago

Russian finance minister says pension money could help to fund deficit

Russian Finance Minister Anton Siluanov speaks during a news conference after a meeting dedicated to the BRICS summit in Moscow, Russia, July 7, 2015. REUTERS/BRICS Photohost/RIA Novosti

DONGUZ, Russia (Reuters) - Russia’s Finance Minister Anton Siluanov said on Saturday pension savings would be a good source of funding to help finance the country’s budget deficit.

Siluanov was speaking to reporters at a military facility in the Orenburg region where President Vladimir Putin was holding a meeting. His comments come ahead of a government decision on whether to divert pension savings to fund the budget directly.

He said that pension funds were expected to buy around 345-350 billion roubles ($10.47 billion) in government bonds next year, helping to fund the one trillion roubles in domestic borrowing penciled in by the government.

The government is debating whether obligatory contributions which employers’ pay into pension funds should be frozen for the third year running so the money can be diverted to the state to help to fill budget holes.

Russia’s economy is under pressure from low oil prices and the impact of Western economic sanctions imposed over the country’s role in the Ukraine crisis.

The idea of diverting these contributions to pay state pensions is supported by the labor ministry, but it has long been opposed by the finance ministry, because of its negative impact on financial markets.

Siluanov said he expected the government to take a decision next week on the fate of the obligatory pension contributions in 2016.

Reporting By Denis Dyomkin, writing by Jason Bush. Editing by Jane Merriman

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