MOSCOW, 13 Jan. The Russian economy must adapt to new economic conditions, when the growth rate of world GDP is slowing, and high oil prices in the near future should not wait — this means that the reduction of budget expenditures is inevitable. However, social obligations do not fall under the knife and will certainly be fulfilled, assure of the government.
Financial-economic bloc of the government at the first discussion platform this year – the Gaidar forum unanimously called to prepare for the difficult life in the new reality.
“I believe that we enter a period of new normality, in the era of powerful constraints to economic growth, when these all of the drivers of economic growth classical… these drivers simply cease to exist. It should be considered in the strategy of economic development of the country in the long term. And have to bring the costs into compliance with the new future”, — said the Minister of economic development Alexei Ulyukayev, the first to receive word on the forum.
The budget of the Russian Federation, as the country’s economy, still very dependent on oil prices, therefore, structural changes are inevitable, and they will be very hard, warned Finance Minister Anton Siluanov. Otherwise, “inflating” the budget on paper, the Russian authorities run the risk to repeat the scenario of 1998-1999, when the pressures of galloping inflation actually fell on the shoulders of citizens.
While low oil prices can persist for a long time. “Now there is a very harsh correction in oil prices. We see that no one reduces the production, and most likely, in the near future we will continue to see lower prices for this product”, – has given the forecast of the Minister of Finance of the Russian Federation.
Spending budget will have to optimize, in absentia was supported by the Prime Minister Dmitry Medvedev. “The basic principle of our policy remains that it must live within its means, including reducing spending and reducing spending on the government apparatus, privatization of part of state assets”, — said Medvedev, speaking at the forum.
Russia’s budget is not yet fully adapted to low oil prices, and if you don’t do this now, the economy could face yet another shock.
“Our task now is to bring the budget in line with new realities. If we don’t do that, there will be the same as in 1998-1999: population will pay through inflation for what we did in part bring the budget in line with new realities,” — said Siluanov. The economic crisis of 1998 became one of the biggest in modern Russian history – for example, inflation that year reached 84.5 percent.
You cannot compare the 1998 crisis and the current situation, do not agree the Prime Minister — the situation in the Russian economy is difficult, but manageable.
“The current drop in prices is often compared to the crisis of 98-th year. Then oil prices fell about 2.5 times in two years, the industry has collapsed by 40%. Now prices were falling and stronger, and faster. Against high, who was a few years ago, almost 600%, can be considered”, — explained his position to Medvedev.
The Finance Minister noted that the Russian budget is balanced at an oil price of 82 dollars per barrel. Budget 2016 based on the estimation of the expected average annual oil price in 50 dollars and with a deficit of 3% of GDP. Siluanov said that the Ministry of Finance proposes the budget is being adjusted for 2016 to lay in it average annual price for oil 40 dollars for barrel. “But you have to be ready by 30 dollars a barrel,” warned the Minister.
The speaker did not lift the veil of secrecy on specified underlying macroeconomic forecast for this year, which the Ministry will present before the end of January. However, he said that the Ministry of economic development analyzes the so-called stress-test scenario with an average annual oil price at 25 dollars per barrel, exchange rate of 80 rubles per dollar and the budget deficit in 7-7. 5% of GDP.
Officials on Wednesday for the first time publicly acknowledged the inevitability of the reduction of budget expenditures in the current year by 10%.
“We have to make tough decisions on the budget… And we have here to act not just determining what is effective and what is ineffective. We have to act in two directions: to reduce budget expenditures, and that subject to funding, to identify ineffective will pursue” — said the first Deputy Prime Minister Igor Shuvalov.
Currently the Ministry is prepared offers on reduction of own costs. By mid-January, departments submit them to the Ministry of Finance, which by the end of the first quarter will issue appropriate amendments to the budget.
While it is not clear which budget items would be cut. “Now the ministries and departments… to single out the priorities on these allocations and make decisions about choosing a major most effective costs and cut inefficient spending,” — said Siluanov. Savings from spending cuts, according to calculations of the Ministry of Finance, exceed 500 billion rubles in 2016.
But cuts in the Federal budget, the government does not intend to be limited, should not remain aloof and budgets of companies with state participation. “The state-owned companies, which occupy a significant part of the economy, it is also necessary to carry out the same actions to bring their budgets into line with new conditions”, — said Siluanov.
The reduction of the budget of the Russian Federation may be greater than 10%, does not exclude the former Minister of Finance, the head of Committee of civil initiatives Alexei Kudrin. “Reduction in 10% is an optimistic forecast,” he said.
By cutting costs, the government does not leave attempts to find new sources to Fund the remaining obligations, primarily social.
“The obligations are to be fulfilled, and social state — and in the field of wages and pensions”, — said Ulyukayev. The government of the Russian Federation in the field of social support will take the most vigorous measures, adequate to the current situation, promised and Prime Minister Medvedev.
Deputy Prime Minister Olga Golodets said that low oil prices are not a reason to abandon further indexing of pensions this year. “We will fight to the last, we will now fight”, — said the Golodets. The social block of the government will ensure that in the end pensions in the Russian Federation in 2016 have been indexed for actual inflation 2015 at 12.9%, and intends to raise this issue, not waiting for the summer.
The Finance Minister confirmed that social obligations are not subject to adjustment. The necessary funds Siluanov hopes to raise by selling packages of large state-owned companies. “The idea is to get about a trillion rubles for two years to secure extra funds from the sale of the property of the state. This is a realistic figure,” — said the Minister. Now, against a budget figure of 90 billion rubles.
At the end of last year, Siluanov said that we can talk about privatization of large companies, including package of Rosneft, Sovkomflot, and Aeroflot. However, these assets are in the privatization program the first year. Their possible sale in the near future remains a big question.
The economic development Minister added that the government should think about the privatization of the largest state banks — Sberbank and VTB. According to the speaker, is to allow us to solve the problem of recapitalization of the banking system. However, the plans of the authorities on realization of Bank assets can overshadow Western sanctions.