Look beyond the horizon: what Putin has proposed on the economic Council


President Vladimir Putin held the first in the last two years the meeting of the presidential economic Council, to discuss “new sources of growth” — including such unusual, like the address money issue.

Opening the Council, Putin, citing experts, said that the Russian economy overall has stabilized, adapted to current conditions”. “Now it is important to look beyond the horizon, to address issues of a strategic nature”, – said the President.

Putin acknowledged that the old model of economic growth had exhausted itself: “Reserves and resources at the beginning of the two thousandth moved our economy forward, are not working as before.” If you do not find new sources of growth, “GDP growth will be somewhere around the zero mark” (quoted by the Kremlin website). The task of the economic Council, the President outlined: “to discuss and outline key objectives for economic policy until 2025, to determine the basic factors of economic growth and social development”. And outlined restrictions: “to maintain macroeconomic stability, to prevent the buildup of the budget deficit and acceleration of inflation”.

Resonant themes

The discussion behind closed doors lasted three hours. Presentations were made by the Chairman of Center for strategic development Alexey Kudrin, the business Ombudsman Boris Titov and the Minister of economic development Alexei Ulyukayev. A separate presentation was the President’s Advisor Sergey Glazyev. It was devoted to the monetary policy, said three of the interlocutor who was present at the meeting – the Federal official and two representatives of business organizations.

At the meeting raised several resonant themes: the issue of money, which it is proposed to increase investment in the economy, the need to reduce the budget deficit, as well as the theme of shadow employment and “garage of the economy,” said the source. Solutions any one of these issues was not accepted, they argue.

The proposal to target money issue came from Titov and Glazyev. The necessary amount of such monetary issue that is specified previously in the report “Economics of growth” of the Stolypin club — 1.5 trillion rubles. per year. “There were different views on the potential role of the issue of money to stimulate growth. There is a position, which is that even talking about the issue threat in terms of potential impact on inflation. There is a position that monetary issue will not affect inflation. Fundamentally, what is needed to support investment spending, which lead to a reduction in imports or increase in exports,” says one of the interlocutors . According to him, to spend that kind of money on income growth and support domestic demand is meaningless — it just overlaps the growth of imports.

Putin at the meeting expressed opinions about the issue, according to two participants. The very idea he rejected, and listened to opinions.

Budget and pensions

Serious discussion about what to do with the budget deficit, says one of the interlocutors . Alexei Kudrin, Chairman of CSR and Deputy in Putin’s economic Council, advocated the restriction of spending budget and deficit reduction. The best way that will keep costs and reduce the deficit is to encourage economic growth to 4% per year in 2018-2019, mentioned in the CSR presentation prepared for the meeting (have). The achievement of such growth rates in the medium term will be possible only in case of reforms, including reduction of state involvement in the economy, raising the retirement age and improving the judicial and law enforcement systems, as follows from the presentation. “My goal is to show that if you do not deal with institutions, then economic growth will not be”, — Kudrin has explained to Agency Bloomberg. “The position is quite conservative,” says one of the interlocutors . — The question of how to spend [on what to direct budget expenditures]”.

Economic development Minister Alexei Ulyukayev proposed to help companies to reduce costs, including by reducing labor costs and curb the growth of tariffs of natural monopolies, told the friends of the Presidium of the economic Council, who attended the meeting. This will enable businesses to free up resources for investment. But against the reduction in labor costs were “social” Deputy Prime Minister Olga Golodets: she said that because of this will be reduced consumption — one of the sources of economic growth, said two of the interlocutor.

Separately on the Council touched upon the problems of the labour market and the informal employment. On the informal labour market in Russia accounts for up to 33% of all employed in the economy (22.3 million people in 2014, according to the Director of the Institute of labour and social security Ranhigs Alexander Safonov). “On this subject the President actively engaged in the discussion and said that you need to understand what causes people to go into the shadows, and to offer something that will allow these people to legalize work”, — retells the contents of the discussion, one of the interlocutors .

Among the topics were the retirement age. About the necessity of raising the retirement age said Kudrin, Ulyukayev added that to avoid this solution will fail. However, Golodets believes that the need to approach this issue carefully and step by step,” said two participants of the meeting. “She [the theme of raising the retirement age] was raised in my speech in the comments Golodets. Today he [the President] wasn’t affected,” — said Kudrin after a meeting (quoted by TASS). awaiting the comments of representatives speaker and Golodets.

It is unclear whether following the meeting, some errands, said the President’s press Secretary Dmitry Peskov. “All points of view are taken into account. The discussion will continue,” he said.