Reform of Social Benefits in Russia: Regional Disparities May Increase

The reform of social benefits in Russia, which was launched at the beginning of the year, could lead to upward
pressure on expenditure in some regions and so to a reduction in much-needed capital spending. The main aim
of the reform, which has led to protests in some regions, is to improve the financial position of publicly-owned
companies by replacing concessionary pricing with cash allowances paid directly to identified social groups. It
also aims to increase the transparency of financial flows between the regional authorities and their publiclyowned
companies. However, the reform may place an additional burden on regional budgets, as the regional
authorities are currently responsible for providing the cash allowances.