Medvedev will hold a regular meeting on financial economic issues

Medvedev will hold a regular meeting on financial economic issues

MOSCOW, January 18. Prime Minister Dmitry Medvedev will hold a regular meeting on financial economic issues. According to the press service of the government, the event will be attended by first Vice-Premier Igor Shuvalov, Vice-premiers Olga Golodets, Dmitry Kozak, Dmitry Rogozin, Yuri Trutnev and Alexander Khloponin, the presidential aide Andrei Belousov, Finance Minister Anton Siluanov, economic development Minister Alexei Ulyukayev, Central Bank Chairman Elvira Nabiullina.

Live within your means

Last Friday the Prime Minister also held a meeting on economic issues related to the execution of the Federal budget in 2016.

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Then he called on the members of the government to quickly decide on the most realistic forecast of oil prices used in the calculation of the expected revenues.

Thus, according to him, in the face of volatility in oil prices it probably is not the exact figure, but about a certain price range, “I would like to narrow how it happens.”

Medvedev added that the dramatic movement in oil prices is already creating serious risks for the execution of the budget, but noted that their further decline.

Last week, speaking at the Gaidar forum in Moscow, Medvedev has not excluded that will require adjustment to the budget, if world oil prices will continue to decline.

In addition, he called for “prepare for the worst-case scenario, as is done in other countries”. According to him, for the government the main question now “is the most effective form of optimization of the budget”.

However, he drew attention that the basic principle of Russian policy remains: “to live within our means”, including by reducing spending and reducing spending on the government apparatus, privatization of part of state assets.

How to change the budget

Finance Minister Anton Siluanov said earlier that the ministries and agencies until mid-January must submit to the Ministry of Finance their proposals for a 10 per cent reduction of their costs in 2016.

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All, according to him, therefore, the Russian budget could save more than 500 billion rubles. The Ministry of Finance intends to adjust the budget of the current year to the end of the first quarter. And it’s not only about optimizing costs, but also increase revenues, Siluanov said.

According to the Minister, without changing the budget structure, you can reduce the expenses of ministries is only 10%. Greater reduction will lead to serious changes in the structure of the budget.

The forecast the MAYOR

To prepare amendments to the budget the MAYOR has updated the forecast of socio-economic development by 2016. According to the document, the average annual ruble rate will be RUB 68,2/$1; price of Urals oil – $40 per barrel, inflation of 8.5%; the outflow of capital – $50 billion

Provide for a reduction in GDP by 0.8% against the expected growth by 0.7%. At these parameters, the Finance Ministry expects to achieve the limit of the budget deficit at 3% of GDP.

While the Ministry considers stress scenarios and predict with the price of $25 per barrel and exchange rate of 80 rubles/$1. In such a scenario, as stated earlier, the head of the MAYOR Alexei Ulyukayev, the budget deficit could rise to 7-7. 5% GDP in 2016.

The enacted budget for 2016 laid out with revenues of $ 13,738 trillion (17.5 percent of GDP) and expenditure 16,099 trillion rubles (20.5% of GDP). The budget deficit will reach 2.36 trillion, or 3% of GDP.

The budget is based on the inflation rate not exceeding 6.4 per cent (December 2016 to December 2015) and the average annual price of Brent crude oil to $50 dollars per barrel. From the beginning of 2016 price of Brent fell by 21.3%.