The government will increase pensions by 6.3 percent next month despite warnings from Finance Minister Alexei Kudrin on Thursday that the budget cannot afford it.

"We have the means, and I think the decision to increase pensions will not affect the macroeconomic conditions," Prime Minister Vladimir Putin said at a Cabinet meeting. The increase signifies "carrying out our responsibilities before our citizens," Putin added.

The pension fund may see a deficit of up to 170 billion rubles ($5.71 billion) if any increases not indicated in the legislation are made, Kudrin said. By law, pensions can be increased if the Pension Fund makes a profit or if inflation is especially high. The fund's profits did not increase, nor will they increase in the current year, and inflation is expected at clock in at 5.6 percent to 7.5 percent in 2010. Therefore, the law does not allow for a pension increase, Kudrin said, RIA-Novosti reported.

"We have the money," Putin replied. "Our ability to lower inflation last year … indicates that we can maintain macroeconomic conditions as planned," he said.