The budget is investment: what they talked about at the forum “Russia calling!”

“The forum is taking place in a difficult geopolitical situation. In the West many say unfair words,” tried to set the tone of the discussion, the President of VTB Andrey Kostin. He assured the audience the continued interest of investors to the Russian market (gave the example of placing of Eurobonds the Ministry of Finance in September), the mentioned negative rates in Europe and said that in Russia it is possible to get a “good return on a secure investment”.

The conversation about the investment attractiveness has shifted to discussion of budget parameters, ways of filling and further development of the Russian economy. The session was entitled “From reaction to external shocks — to the resumption of growth.” Like how in the Russian economy growth will begin, discussing the Central Bank Chairman Elvira Nabiullina, Finance Minister Anton Siluanov and Minister of economic development Alexei Ulyukayev.

Inflation will help

One of the necessary conditions of GDP growth, low inflation, however, in itself it is the improvement of the economic situation is not conducive, said the head of the Central Bank Elvira Nabiullina in response to a question from the moderator of the discussion, Yury Solovyov, first Deputy Chairman of the management Board of VTB Bank. He was interested in, not too modestly she appreciates “their great success” in the fight against rising prices and whether it is time to lower the key rate to a lower level.

6-7% is normal inflation, but the goal of the Central Bank (4%) is the investment level that now needed Russia responded Elvira. At this level of price growth investors and households don’t think about inflation as a significant factor influencing their plans, she explained.

The main obstacle for doing business in Russia consider inflation and foreign investors, said the head of the regulator. Such data are contained in the world economic forum. Inflation it came in first place, replacing the corruption, which was the leader among the obstacles to business in Russia in recent years.

Savings should be transformed into investments, said Nabiullina, and low inflation this will help. “Must be a proper balance between consumption and savings,” she said. To stimulate savings in the economy, she said, must be positive real interest rates at 2.5–3%, and this is possible only when inflation will drop to 4% and will stay at this level.

From savings to investment

Then the conversation drifted to the fact that these savings would be nice to turn into investment. Business and households accumulate the funds, but they do not become investment is a “major problem”, which was in the “fat years”, and it is now, Ulyukayev said. Industry and agriculture are in better shape than a year ago, but consumer and investment demand at a lower level. They are not willing to take the risks, said the head of Ministry of economic development.

Investment activity in Russia will begin, promised Ulyukaev. But this will not happen immediately after the transition of the economy to growth, and later. GDP will begin to grow in the fourth quarter of this year, and investment activity in the second half of 2017, he waits. “The lack of transparency for investors immediate economic future affects investment activity”, — said the Minister.

“All the success”, which was discussed at the session, the speaker, Elvira, linked to budget policy, said Finance Minister Anton Siluanov as the laughter and applause in the hall. It is fiscal consolidation helped to reduce inflation, he said, adding that the actions of the Ministry of Finance also helped to avoid an increase in unemployment. “Yes, it was difficult. Yes, this has led to the decline in real income. But in the end had to survive this difficult period, and now we’re going to move forward,” promised the audience Siluanov.

And it will happen due to the fact that investors believe in the right approach of the Ministry of Finance to the budget process and in General in Russia, said the Minister of Finance. As an example he cited RZD (the head of the company Oleg Belozerov was sitting), Recalling that they refused from the NWF and is on the market: “because of what? Due to the fact that rates are reduced”. What Belozerov later said that he rather have to reduce costs by 60 billion rubles in the previous year.

Where to get money

Siluanov told the audience that the system of covering the budget deficit will change. Now two-thirds of it is covered by Resinova Fund, and another third — by borrowing and privatization. But the role of the reserves will be reduced as privatization. The government will begin to borrow on the domestic market, a small proportion will be involved and abroad, promised Siluanov.

Privatization became a matter of dispute between Ulyukaev and Siluanov. In subsequent years, plans for her “quite modest,” said Siluanov. Revenues amount to only around 130 billion rubles received from sales to VTB and Sovcomflot, said the Finance Minister.

His expectations did not agree the speaker. “We have a lot of good assets in the reserve, some of them included in the privatization plan,” said he, remembering the same VTB and Sovcomflot. As said Ulyukayev, the government will be “looking for a good window” to sell them (he later told journalists that the government expects to receive from privatization 200-300 billion rubles. in each of the next three years). Siluanov said the statement by the head of Ministry of economic development is “optimistic”.

The basic factor

The President of the Moscow school of management SKOLKOVO Andrei Sharonov believes that the budget had so much to say, because Russia needs to maintain macroeconomic stability. He calls the resistance economy “is a fundamental hygiene factor” which is necessary to investors, although it is not enough.

According to Sharonov, no special stimulus is the apparent negative forecasts so far suggest not, so we are talking about basic things. Attempts to improve the investment climate and the statements about this he compares with the leaky swimming pool. “The water pouring makes no sense, I think that they also understand,” says Sharonov.

The Chairman of the Board of KPMG in Russia and the CIS Oleg Goshchansky believes that the monetary authorities spoke about the exciting now all the problem. “Money today is the most relevant one. Today the situation is at all complicated, not only States, but private companies too,” he says.

General Director of “Sputnik — capital Management” Alexander Losev connects change the rhetoric, change the audience of the forum: there are more companies and less foreign participants. Therefore, in his opinion, it is important to show participants that the state does all right with the economy.

And managing partner of investment company FNSB Yan Yanovsky compares the VTB conference with a trip to the psychologist. “Every year people say that everything is fine, everything is fine. They leave reassured again with a sense of confidence in the future, it is very useful,” he says. But, according to him, investors are more specifics. “So I think that the discussion of specifics for the investors it is comfortable. It inspires confidence,” he concludes.