MOSCOW

With the sharp rise of poverty in Russia, the government needs to prioritize its obligations to improve the economy, Russia’s ex-Finance Minister Alexei Kudrin said Wednesday.

“The Russian government needs to raise the retirement age and solve other issues of debt restructuring,” Kudrin was quoted as saying by Russian daily RBC.

Russians enjoy one of the world's earliest retirements, currently 60 for men and just 55 for women. However, the government has not brought up the increase of retirement age yet, mostly due to political and economic reasons as the level of Russia's foreign debts is currently $538.2 billion.

Oil prices have lost more than 60 percent of their value since the June 2014 peak with Brent crude currently trading at around $32 per barrel.

The Russian economy heavily relies on oil exports, as more then 50 percent of the country’s revenues come from oil and gas exports, which are linked to oil prices.

“We can talk about a welfare state in Russia only if an annual economic growth of 5 percent is reached,” Kudrin said.

The World Bank has revised its predictions on the Russian economy and now foresees a continuation of shrinkage in 2016 rather than a return to growth as the bank previously expected in June 2015.

The bank estimates the Russian economy diminished by 3.8 percent in 2015 and said that this could dwindle further by 0.7 percent this year.

Noting that Russia needs to build up the economy a little bit differently now, Kudrin said that the government needs to cut some costs.

"However, I do not know where to direct these cost cuts. We have already cut education and health costs,” Kudrin said, adding that the “Russian economy is in a vicious circle.”

Kudrin was Russia's Minister of Finance from 2000 to 2011 and was known as a close ally of Russian President Vladimir Putin.