The IMF supported the Ministry of Finance in a dispute with Kudrin and called for the rigidity of fiscal rules


Moscow. May 19. INTERFAX.RU – the Finance Ministry has received support in a dispute with his former Manager on the stringency of the budget rules the future of the International monetary Fund.

In April ex-Minister of Finance, Chairman of the Board of the Center for strategic development Alexey Kudrin has unexpectedly taken the initiative to make the fiscal rule less rigid. “Now with the budget rule and the $40 hard the level is taken. We say – let’s live forty dollars, and I believe that it is possible to make a more compromising step – $45,” said Kudrin, speaking April 20 at the Board of Finance.

The Finance Ministry will stick to its proposals on the parameters of the fiscal rules: attempts to increase the cut-off price from $40 to $45 per barrel may seem tempting, but they are fraught with serious risks, parried the present head of Department Anton Siluanov.

“The Finance Ministry has unequivocally supported the use of the budget rule oil price of $40 per barrel. It is the most balanced price from the point of view of risks to the budget, exchange rate, possible changes in the cost of raw materials on world markets,” he said. “The desire to increase budget spending by raising the estimated price of oil will lead to the brittleness of cost structures, strengthening its dependence on the external market pressure on the exchange rate and, ultimately, to higher risks for investors wishing to do business in our country. We have already passed through the “easy decision” to find the budgetary resources that have always resulted in problems not only for budget but for the economy as a whole, while the decline in oil prices. On the oil market is influenced by the actions of the OPEC on oil production, shale oil, world energy demand – all what Russia can not affect”, – said Siluanov.

In traditional IMF statement following the visit of the IMF mission in Russia, published on Friday, supported the Ministry’s position is, moreover, proposed to strengthen it.

“In developing the new budgetary rules to the official authorities should consider setting higher target levels of savings to ensure intergenerational equity and a mechanism to ensure smooth adaptation to sustained changes in oil prices”, – said in a statement.

The IMF also welcomes the return of the three-year planning horizon when forming the Federal budget for 2017-2019. “Under the three-year budget, the pace of deficit reduction sufficient taking into account the effect of the economic recovery – to ensure the sustainability of fiscal adjustments in conditions of prolonged low oil prices. However, provision should be made for more permanent and more targeted measures, including for the protection of stimulating the growth of budget expenditures”, – the experts of the Fund.

In their opinion, the purchase of foreign currency with the use of the mechanism, announced by the Ministry of Finance in February, “increases the predictability of fiscal policy and thus ensures the preservation and, ultimately, replenish the sovereign funds.” “However, this mechanism cannot substitute for fiscal rules, which would strengthen fiscal adjustment”, the statement noted.

Source