Fiscal policy in Russia may change, and there are three main assumptions, write in a recent review, the economists from the Russian Academy of national economy and public administration (Ranepa). First, the budget for a long time depended on export of raw materials, and it has become a brake on economic restructuring. Due to the reduction of revenues from sale of oil and gas made it possible to change the priorities of budgetary expenditures, the report said. Another variable reduction of reserves: the Reserve Fund, as stated by the Ministry of Finance, runs out in 2017, and funds from the national welfare Fund (NWF), indicate in the Ranepa, “barely enough to balance the Federal budget” in the years 2017-2019.
The third reason is self-perpetuating debt of regional budgets. In a situation when government entities have to fulfill may decrees of the President, they refuse to budget investments and increasing debts. Thus, at the regional level has exacerbated the problem of the national debt: many actors before 2012 had an insignificant debt, but by the beginning of 2016 from 14 regions, its volume exceeds the size of the budget revenues (tax and Nontax). Budgetary policy in Russia, affects the stability of the budget system and “effectively means postponing the crisis in public finances on the not already distant future”, concluded the experts.
Analysts also questioned the sustainability of the system of fiscal rules, which is due to start from 2020. The fiscal rule will limit expenses of the budget of the basic income with the price of a barrel of oil is $40 less in debt service costs. The purpose of budget rules to reduce the dependence of domestic prices and the exchange rate from the fluctuations of oil prices. This design “looks pretty stable”, according to Ranepa. To tie the costs to the price of oil is only in the case of “if the budget rule are based on more or less plausible hypothesis describing patterns of movement in oil prices”. Otherwise, the credibility of this measure will be undermined and the fiscal rule will have to again revise.
In General, the draft budget for the next three years contains “certain positive shifts in the structure of costs,” the analysts said. For example, the planned reduction in defense spending. Now Russia is among the top leaders on defense expenditures among the countries that are not at war, economists say. In 2016, Federal spending on “national defense” reached almost 3.9 trillion (23.7 percent of total expenditures), of which 800 billion rubles — repayment of loans defense companies, wrote earlier. But in 2017, defense spending is reduced to 2.84 trillion is 27% less than planned for 2016, and 11% less than it was in 2015.
According to estimates of the Stockholm Institute for peace studies (SIPRI), military expenditures of Russia in relation to GDP in 2015 reached a post-Soviet high of 5.4%. On this indicator Russia shared the sixth—the seventh place with Israel. Above — countries such as South Sudan and Iraq, but they have directly on their territory remain in conflict.
A sudden increase in the costs of the 2016 budget for the payment of loans to defense enterprises was a surprise, writes in the Foreword to the monitoring Advisor to the rector of Ranepa Vladimir Gurevich. “It is hardly necessary to ask the question, what did the company for a loan, and even more so — why they did not pay for them (it is strange to pay the debts, if they are prepared to pay the state),” he says.
Among positive aspects in the budget from the point of view of the cost structure of the Ranepa experts say reducing social costs. However, this is likely not a conscious decision, and “inertial motion with a total budget of consolidation”, they say. Allocations from the Federal budget on education and health in the next three years will fall to the level of 2006, indicated earlier, the experts of the Higher school of Economics. In turn, the Finance Ministry said that education is the biggest expenditure, if we consider the total spending of the Federal and regional budgets.