Business Ombudsman Boris Titov and his associates of the Stolypin club, expect that their program “Economics of growth” will allow a decade to bring Russia into a world leader in several economic indicators. It follows from the targets presented on Thursday in the modified version of the program. For example, by 2025, Russia should enter the top 30 countries on the human development index of the United Nations (now in 57th place), twice to narrow the gap between rich and poor, to increase the share of “knowledge economy” in GDP to 30%. The ambition of the authors of the program are such that some targets put Russia by 2025, higher than in countries such as USA, Germany or New Zealand.
Titov and his colleagues (among them — the Deputy Chairman of Vnesheconombank Andrei Klepach, co-Chairman of “Business Russia” Anton Danilov-Danilyan, head of the Department of international relations IMEMO Yakov Mirkin and Executive Director of IK “Arbat the Capital” Alexey Golubovich) on Thursday introduced the concept of medium-term programme of development of the Russian economy, the development of which was first announced in October 2015 at a meeting of the Stolypin club. In early 2016 a program that resonated primarily because of proposals to radically change the monetary policy in the country, were interested in Prime Minister Dmitry Medvedev, who instructed to establish an interagency working group to finalize the concept. In March—April the group held a series of meetings, which resulted in a modified concept of the program. With her Boris Titov will go to President Vladimir Putin on 25 may, the Ombudsman will make a report on the meeting of the renewed Economic Council under the President.
The Central element of the programme is the transition of the government and the Bank of Russia from “positive” to “stimulative” monetary and industrial policies — “policies that ensure the priority offer is available with low interest rate, credit, especially long-term, for increased production and investment for development”, says the agreed inter-Ministerial working group the text of the concept (have). The authors of the program call to implement a “Russian version of the moderately loose monetary policy (“quantitative easing”), aimed at refinancing of the Central Bank loans to commercial banks and development institutions”. In addition, the authors offer a way out of small business “from the shadows”, “technology updating”, “new industrialization”, a tax reform that will stimulate economic growth, the weakening of control and supervision and other recipes for accelerated development.
The other controversial element of the program, which is associated with the ideas of the presidential adviser Sergey Glazyev, is the proposal to introduce selective exchange controls — “individual elements “soft” currency regulation”.
Titov and his colleagues believe that the implementation of the “growth Economy” will allow for ten years to increase the share of investment in GDP to 30% (from the current 18%). For comparison, in China, which in recent years was based on investment growth, the share of investment in fixed capital in GDP is hovering around 45%, according to the world Bank. The concept developers want to increase the proportion of small and medium business up to 60% of all employment in the country — a figure comparable to the United States, where small businesses account for 55% of all jobs (according to the American Management on Affairs of small business). The rate of corporate lending by the banking sector is expected to reach 150% of GDP (now less than 50%), the interest rate on commercial credits to provide a level no higher than 3-5%. Inflation, accordingly, will not exceed 3%.
Now the income of the richest 10% of Russians at 13 times the income of the poorest, and “Economics of growth” aimed to reduce the gap to seven times. In this case, Russia is ahead of such countries as France (the income gap of 7.4, according to the OECD), Australia (8,8) and the UK (10,5), and closer to a model from the perspective of material equality, Norway, Sweden, and Germany.
Targets “growth Economy” are unrealistic, says Finance Professor resh Oleg Shibanov. For example, to significantly increase the share of investment in GDP, have “greatly stimulate savings in the country — for example, abolishing the pension system”. To reduce the share of government in the economy doubled over the ten years is almost impossible, and a stable 2-3% inflation is “unrealistic for a developing economy”.
The idea for the program associated with the increase in the money supply (assuming that the new money issue will not be directed at government spending and the target image will be used to promote investment, the authors point out), were subjected to sharp criticism by some experts. Now, in the process of preparing a modified concept, to respond to the suggestions of “Economics of growth” had and profile officials. As follows from the Protocol of disagreements to the concept (have), their “dissenting opinions”, in particular, introduced the Ministry of Finance and the Bank of Russia. So, the Finance Ministry outlined seven comments, including referring to the fundamental provisions of economic theory. “The banking system always finds the money for the loan, as the loan creates the Deposit, i.e. within the economy as a whole lending self-financed the creation of the appropriate credit amount in the Deposit base. Thus, highly profitable projects in the economy by themselves, find funding,” argues the Ministry of Finance with the authors who consider that the lack of lending by the Central Bank may lead to a lack of liquidity from banks and loans to real sector will be missed. And the Ministry of Finance, and authors of “Economics of growth” agree that we need to reduce the dependence of the ruble on oil prices, but the Finance Ministry says that it needs a fiscal rule, which saves a foreign exchange windfall from oil exports, but experts of the Stolypin club, are encouraged to send a portion of such surplus not in budget foreign savings, and in investments in the Russian economy.
CBA in its comments points out that “stimulative” monetary policy, by itself, does not solve structural and institutional problems that increase the availability of loans can occur only in conditions of price stability, and to intervene in the ruble is impossible. What the authors of the program meet the uncompromising criticism of the Central Bank: “the Practice 1995-2016 years showed that the Bank of Russia, and giving exceptional priority to the achievement of “price stability”, in essence reducing its policy precisely to that purpose, have failed in their task. With 20 plus years the economy works under conditions of unbalanced and distorted financial system with volatility, one of the highest in the world, which does not stimulate, but suppresses the growth and modernization”.
Fundamentally, it is different approaches, says Shibanov, the Ministry of Finance adheres to the “mainstream enough research, a scientific approach”. Similarly, CB: he recalls that long-term and even the medium can affect the growth rate of GDP, and in response, the authors of the Stolypin club, say “let’s expand the money supply”.
With the participation of Yana Milyukova