The experts identified shortcomings of the new Russian budget: passive and cautious

The Russian state Duma in the third final reading adopted the draft Federal budget for 2018 and the planned period of 2019-2020. The main characteristics of the Treasury new budget rule, implying additional revenues from the oil and gas industry, reducing costs in most sections and economic growth over 2% with the falling price of oil. The draft budget was imposed with the parameters of the income in 2018 in the amount of 15,258 virtually any trillion, expenses — 16,529 trillion and a deficit of 1.3% of GDP. By 2020, the income set at the level of 16,285 virtually any trillion, expenses — virtually any 17,155 trillion, the deficit — 0.8% of gross domestic product. “MK” asked well-known economists to assess the strengths and weaknesses of the Russian budget.

photo: Alex geldings

Andrei NECHAYEV, former Minister of Economics:

— From the point of view of the Finance Ministry and the government overall, the strength of the budget — that it is quite conservative and stable. Incorporated in the projections of Treasury the price of oil lower than the present, and the likelihood that the budget will have to be reviewed is minimal, which is good for the stability of the entire financial system.

Weaknesses are those budget priorities that once again are not in favor of the people: significant spending on defense and law enforcement agencies to the detriment of the financing of education and health. Despite the fact that the adoption of the budget is accompanied by stormy rhetoric about the social orientation of the document, support of social sphere occurs only in words.

Yakov MIRKIN, head of international capital markets, Institute of world economy and international relations Russian Academy of Sciences:

— Budget map of the country for three years looks cautious and fearful. It is evident the increase of tax burden in the absence of investment incentives for business. So, manifests a fundamental property of the Russian budget in shameless to get into the incomes of the population and entrepreneurs, to save, to cut off the excess, for example investment. The budget includes a low proportion of investment in fixed capital at the level of only 20-21% of GDP, whereas in developing economies such as China and India, it is 30 to 40%. In such circumstances, Russia is doomed only to dull economic growth to 2.1–2.3 percent, while the world is growing at a rate more than 3%. Economic growth could be supported by income from the new budget rules, but they will be stored in reserve in the reserves and not to spend money. In addition, the budget will place a moderately tight monetary policy of the Central Bank and given the sanctions, the economic growth will only braking.

The strength of the budget could be an attempt to revitalize his social side. For example, in terms of financing pensions, social security, housing, culture shows commitment after a decline during the crisis to return to the level of five years ago, and in healthcare — even to step over this threshold. In General, the picture of passive, but a little more social budget with no incentives for economic growth.

Yaroslav LISSOVOLIK, chief economist at Eurasian development Bank:

The main dilemma faced by the creators of the project of the Federal Treasury, the stabilization and further adaptation of the budget to lower oil prices while trying to give an impulse to economic growth. Driver of economic growth would be investment, but the budget share of investment expenditure is very modest and is limited to relatively low oil prices.

However, based on low cost oil possible additional income due to its rise in price, and they are likely to be focused on expenditures in education and health — which can be considered the strength of the budget. Such investments enhance the quality of human capital, and due to the prioritization of these articles it is possible to achieve a higher growth rate. Amid falling incomes in the past few years the budget can be a tool to mitigate the negative factors in the social sphere.

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