Medvedev: there remain large risks to budget implementation due to the fall in oil prices

Medvedev: there remain large risks to budget implementation due to the fall in oil prices

GORKI, January 18. The dynamics of oil prices are poorly predictable, the lifting of the sanctions on Iran provoked a further drop in prices. This was stated by Prime Minister Dmitry Medvedev at a meeting on the budget 2016.

“To cut costs, of course, necessary”

“Further dynamics of oil prices are poorly predictable. Moreover, as you know, sanctions are lifted from Iran, and oil prices today continued to fall. Accordingly, there remain large risks for the budget execution of budget commitments and, in General, in the economic sphere,” Medvedev said.

The Prime Minister noted that budget execution is necessary to take additional measures, particularly in terms of replenishment of its revenues, and in terms more vigorous spending cuts.

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“I want to emphasize that to cut costs, of course, necessary. Here, unfortunately, there is no uniquely perfect solutions, that’s why I have arranged. But in any case, just about proportional to the reduction of the budget speech is not” – said Medvedev. He added that “it is important to optimize the spending so that it didn’t hurt the positive changes that have emerged in our economy in a number of sectors after the adoption of known solutions”.

According to him, it comes to such industries as agriculture, metallurgy, the individual segments of the chemical industry, machine building, agricultural machine building, railway machine building. “All these areas have received a certain impetus to lose the impossible. You need to take the most energetic steps in the budget and not only, to not only retain these developments, but also to strengthen them where possible,” he said.


Prices for Brent crude and the dollar

Prices for Brent crude and the dollar. Infographics

He expressed confidence that even in the current difficult economic environment “possible and necessary in every industry to find an adequate set of measures, measures that will support these growth points and gradually achieve stable development of the entire economy”. While this should be done whenever the dynamics of commodity prices, said the head of government, “otherwise the theme of budget cuts we are going to come back all the time”.

The Prime Minister stressed that Russia should not abandon the creation of a more modern structure of the economy, difficult conditions must contribute to it. “From the goal of building a more modern structure of the economy in General, we should not give up even in these difficult conditions. On the contrary, may be only now we have the opportunity to do it as robust as possible”, he concluded.

How to increase budget revenues

The Finance Ministry has already submitted proposals to increase revenues, including privatization, said Prime Minister.

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“Certain ideas to increase budget revenues, to reduce costs we have already received from the Ministry of Finance last week. Some of them were discussed. They certainly are different, address some very complex issues,” he said, noting that the Ministry submitted the proposal on “accelerating privatization and measures to improve the efficiency of companies, which are controlled by the state.”

The number of forks in the road budget for 2016 is of a technical nature, he noted, whereas the “fundamental nature”.

“We need as quickly as possible to reach agreed positions”, – said Medvedev.

Earlier, the Minister of Finance Anton Siluanov reported about the expansion of the privatization plan for 2016, which can be enabled Rosneft. Just from the expansion of the plan to him in the next two years the budget may receive an additional 1 trillion roubles.

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A new unified system of collection of tax payments will allow to restore order in this sphere, also said Medvedev.

He also urged the Finance Ministry to create a single, internally consistent system for collecting tax payments, which includes the Federal tax service, Federal customs service, Federal service for alcohol market regulation and administration of social contributions.

“Budget losses due to non-transparent schemes, which are used to avoid paying taxes, result in very significant amounts. The new system, to be used on universal principles, should be based on the most modern information technologies. I hope she will bring order,” said he.

The updated forecast

As expected, the economic development Ministry will soon submit to the government an updated forecast of socio-economic development on the basis of which the Ministry of Finance in the 1st quarter, will revise the main parameters of the budget. The need to revise the parameters of the budget amid a sharp fall in oil prices at the end of last / beginning of this year. As a result, now the price of Urals crude oil is at the level of 26 $ /bbl 50 $ /bbl, put in the budget.

The budget for 2016 is laid out with revenues of $ 13,738 trillion (17.5 percent of GDP), expenditure – 16,099 trillion rubles (20.5% of GDP). The budget deficit will reach 2.36 trillion, or 3% of GDP. The budget is based on the inflation rate not exceeding 6.4 per cent (December 2016 to December 2015). The GDP is expected to be $ 78 trillion 673 billion. The normative size of the Reserve Fund is planned in the amount of 5 trillion 507 billion.

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