The Russian authorities are faced with the temptation to go on increasing the deficit, not further cuts, according to Bloomberg. According to the Agency, reducing costs and increasing revenues can cry the discontent of the electorate of United Russia before the Duma elections.
Against such measures of the “United front”organized by the Bank of Russia and the Ministry of Finance. Reasoning from their lead performances Elvira Nabiullina and Anton Siluanov on Thursday on Congress of the Association of regional banks was the same, says the Agency.
So, Nabiullina called the imbalanced budget “source of risks for the economy and for monetary policy.” In turn, Siluanov said that the lack of the “necessary measures to reduce the budget deficit is a limiting factor to reduce the key rate”.
Bloomberg recalled that the budget for 2016 spending, based on oil prices at $50 a barrel. In fact, a barrel of Urals in January—March, according to the Finance Ministry, was worth an average of $31,99. According to Siluanov, the budget imbalance can lead to shocks, similar to the crisis of 1998-1999.
The chief economist FG “BCS” Vladimir Tikhomirov in a conversation with the Agency noted that “the Central Bank and the Finance Ministry are helping each other, occupy the same position”. “The chance to defend the budget balance, despite the efforts of sectoral ministries to defend the expenditure, large”, said the analyst. However, he admitted that due to elections in the Duma, real cost reduction can take place only in the fourth quarter, which accounts for a significant part of them.
Thursday Nabiullina in her speech paid special attention to inflationary risks associated with the budget. “Urgently needed to develop programs that would allow to balance the budgetary system in the medium term”, — concluded the head of the Central Bank.