Vodka, Cigarette Prices Climb As Russia Rings In 2020

1 January 2020

resident Vladimir Putin has ordered an increase in payments aimed at encouraging Russians to have more children, the second welfare initiative he has signed into law to usher in 2020.

The increase in the so-called “maternity fund” was announced just days after government demographers released projections saying that Russia’s population could drop by more than 12 million over the next two decades.

The increase in family support payments also follows the announcement that the national minimum wage will be increased, a decision that comes amid growing unhappiness among Russians about stagnating wages and creeping inflation.

Russians have also been unhappy about the government’s decision to raise the age when people can receive state pensions — a move that prompted weeks of protests. As well, the national value-added tax was raised by two percentage points last year, a move that hit middle-class Russians hard.

In a statement on its website on January 1, the Kremlin said the measure signed by Putin would increase monthly payments to families who have a second child by 3.8 percent compared with 2017: to 466,000 rubles ($7,510).

The so-called “maternal capital” payments system was initiated in 2007, during Putin’s second term in office, as a way of bolstering Russia’s sagging birth rate.

But it’s unclear whether the payments have done enough to help reverse the population drop that the country recorded in the years leading up to the Soviet collapse and, more dramatically, after the breakup of the Soviet Union.

In a report released on December 27, the State Statistics Service lowered its projections for the next 16 years, with its worst-case scenario showing that the country’s population could drop by more than 12 million by 2036.

Putin on December 30 also signed an order raising the minimum wage by 7.5 percent, to 12,130 rubles ($196).

Meanwhile, the Finance Ministry announced an increase in taxes on alcohol and cigarettes beginning on January 1– an increase that is likely to be met with unhappiness among many Russians.

Still, alcohol consumption, particularly for hard liquor like vodka, has dropped noticeably in recent years, which has helped bolster life expectancy, according to the World Health Organization .

Nonetheless, Russia’s average life expectancy is still several years lower than the European Union average, according to statistics released in 2019.

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