Russia won't rush with structural reforms - PM
MOSCOW (Reuters) - Russia needs economic reforms but should not rush them through, Prime Minister Dmitry Medvedev said on Tuesday, balancing reassuring words for business with promises to ease the economic pain for ordinary people.
Many economists and investors argue that Russia's economy, now in its second year of recession, badly needs reforms to improve its business climate, reduce its dependence on volatile commodity prices and improve over-stretched government finances.
That may require potentially unpopular measures, such as cutbacks in spending on pensions and the defence industry, which the Kremlin has been reluctant to implement.
In an annual address to parliament summing up the work of the government, Medvedev repeated previous promises to pursue reforms. But in a sign of the political difficulty of implementing painful changes, he said they should not be too fast.
"Yes, the country needs deep structural reforms. The government understands this well," he said.
"But it also understands how this is now being reflected in the social sphere. Any forced transformations would strengthen and lengthen the crisis phenomena for several years."
"We will not conduct reforms at the expense of people," Dmitry Medvedev said to rapturous applause.
His caution highlights the government's worries about the political consequences of widespread economic hardships, a few months before parliamentary elections in September that will test the popularity of the pro-government United Russia party.
Although still the most popular party - helped by still high support for President Vladimir Putin - United Russia's support is declining and has fallen below 50 percent, according to weekly polls by the Public Opinion Foundation polling centre.
In another sign of the government's nervousness ahead of the election, Medvedev said there were no plans to revise this year's budget in the spring.
Government officials have previously said the budget would need to be revised to reflect lower-than-expected oil prices. Russian media have reported that the amendments will be delayed until after the elections.
Medvedev also emphasised Russia's economic resilience in the face of tough conditions including low international oil prices, Western sanctions and unstable global markets, as well as structural economic problems at home.
"Our economy is adapting to new conditions," Medevdev said. "Two years ago it was fundamentally different, both in terms of structure and costs. Diversification of the economy is happening."
"We have in effect begun the creation of the prototype of the Russian economy of the next decade."
(Reporting by Darya Korsunskaya and Yelena Fabrichnaya; Writing by Jason Bush; Editing by Richard Balmforth)
