Russia Says Company Towns Engulfed by Crisis as Budget Runs Dry

A crisis has spread to almost every third Russian company town, where one employer dominates the local economy, and only a fraction of them will get government aid, officials said on Wednesday.

“We have 319 monocities, and 94 of them are classified as in crisis,” Economy Minister Alexey Ulyukayev said in Usolye-Sibirskoye, a town in the Irkutsk region of Siberia, at a meeting led by Prime Minister Dmitry Medvedev. “According to our estimates, the funds allocated in the budget for four years will be enough for 20-30 monocities.”

Russia is on course for its widest budget deficit in five years after last year’s slump in oil prices and sanctions over Ukraine pushed the economy into recession. Authorities estimated six years ago that 16 million people, or about 12 percent of the population, lived in one-company towns, where residents depend on a single enterprise for employment and social benefits.

The government plans to allocate 10.8 billion rubles ($189 million) annually in 2016-2017 for their development. If the economy starts to revive, benefits and incentives will be offered to businesses in monocities and the level of financing may increase, Medvedev said.

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