Peter Netreba
Ekaterina Shtukina/Tassels-Minister of Finance Alexei Kudrin and Prime Minister Dmitry Medvedev
EXCERPTS FROM THE ARTICLE:
Together with the 2013-2014 years, when GDP grew by only 1.3 and 0.7% respectively, it turns out that the Russian economy will be in recession or weak growth in seven years
Inflation target of 4% in the “basic” version will not be able to achieve even in 2019
Provides for mandatory minimum social obligations of the state
The stagnation of the economy, the continuation of the sanctions policy freezing wages for civil servants — the forecast of Ministry of economic development proposed budget for the next three years, found “Газета.Ru”. Only the most optimistic scenario when the price of oil above $55 per barrel implies an increase in 2019, and zero capital outflow.
Vladimir Putin has prepared for three years of stagnation
The sad forecast for the 2017-2019 years, has prepared Ministry of economic development for the government and the President. We can say that this is a cold shower for the authorities after the euphoria of the results of parliamentary elections.
On September 21 at the budget meeting of Dmitry Medvedev, the Ministry Alexei Ulyukayev presented three options — “basic”, “basic+” and “target”. “Газета.Ru” acquainted with the proceedings of the meeting and the forecast.
Only in the “target” growth rate of GDP to achieve a high level (4.5 percent) in 2019. Two other options involve the growth by 0.6–2.4 percent. The forecast for the current year coincides with the previously made estimates of the Department — minus 0.6% of GDP.
We are talking about economic stagnation in the three-year period in all three options. Together with the 2013-2014 years, when GDP grew by only 1.3 and 0.7% respectively, it turns out that the Russian economy will be in recession or weak growth in seven years.
And before that there was another crisis in 2009, when the economy fell by 7.8%. Obviously, this is not the pace of development that the country needs.
Economic difficulties led to the fact that for the first time since 2012, to discuss budget issues along with other Ministers were involved in the ex-Finance Minister Alexei Kudrin.
All three of the current macroeconomic forecast reflects the continuation of sanctions and economic retaliation from Russia over three years, and the lack of geopolitical shocks and economic shocks.
The positive effect of the sanctions according to the forecast of one or all of the options would reduce the outflow of capital. According to the “basic” variant, it is reduced from $58 billion in 2015 to $18 billion in 2016-2017 with a further reduction to $16 billion by 2019. In the “target” option in 2019, the outflow of capital will stop completely. At this time, and built the investment model for this scenario — Ministry of economic development believes that this will serve as investment activity and profit growth of residents.
Unlike the Bank of Russia, Ministry of economic development believes that the inflation target of 4% in the “basic” version will not be able to achieve even in 2019 (it will of 4.1%). Next year inflation will be 4.9% in 2018 of 4.4%. The forecast for the end of this year is 5.8%. In two other embodiments, the inflation rate in 2019 will be reduced to 3.9%, while in the “target” option by 4% is expected to be released in 2018.
The basic variant of the forecast is calculated based on the average price of Urals oil of $40 a barrel within three years and average annual dollar rate of 64.4–65.5 rubles In this “flat” approach industry, retail trade, salaries and incomes, investment in fixed capital will grow at a minimum rate which will not exceed 3% by 2019. GDP in this scenario will increase 0.6% next year and by 1.7–2.1 percent in 2018-2019.
The “base” forecast deterioration on most indicators in comparison with the scenarios that were published in the spring. It is worth noting that the Ministry considers “basic” variant of the forecast conservative and do not involve a fundamental change in economic growth model.
The option “basic+” differs from “baseline” that assumes a higher oil price is $50 in 2017 and $55 in 2018-2019 and a lower dollar exchange rate — 58.7 per–61,7 RUB.
It’s a little better than the “basic” version. For example, investments in fixed capital in 2018 or 2019 will amount to 3.8 and 4.5%, retail trade turnover in 2019 will increase by 3.9%.
As for the “target” variant of the forecast, it is some ideal situation. The price of oil is set the same as in the “basic+” (dollar — 57-60,7 rubles). It is assumed that the government carries out reforms, constrains the rates and wage growth, redistributes budget expenditures, Central Bank, next year lowers rates, which is increasing lending, and the private sector increases investment and non-oil exports. As a result, the economy as a whole transferred to the investment model of development.
Salaries do not fit in economic growth
Incomes in the years 2017-2019 will not have a major impact on the economy. The Ministry of economic development believes that the rapid collapse of wages, the same 2015. Then the real wages decreased by 9%. As a result, actual disposable income declined by 4% in 2015 and 5.6% in 2016. At the “basic” version of the wage growth in 2017 is expected only 0.6%, and by 2019, wages will increase by no more than 1.6 percent for the year. While the Ministry is clearly hoping for a repeat of the 90-ies, when the main accounting indicators of incomes of the population, mainly in depressed areas, was due to benefits and pensions.
The economic development Ministry forecast States that “in the conditions of limited financial capacity and the slow recovery of the economy provides for mandatory minimum social obligations of the state”.
In the budget sector salaries will not grow nearly — scheduled only maintaining the level of salaries of teachers, doctors and scientists assured the may decrees of the President 2012.
“For other public sector employees, including civil servants, in 2017-2019 years — a moratorium on the indexation of wages,” — said in a forecast.
In the private sector of the economy, the dynamics of wages will depend on productivity. But in this sector of the economy clearly will affect the situation in 2016 — Ministry of economic development explains the income falls below the projected level of reduction of incomes from entrepreneurial activities and informal earnings. The government is not going to stimulate productivity growth through increased competition among workers for jobs. All variants of the forecast of the unemployment rate will remain at the level of 2015 — around 5.9 percent.
Options to avoid sequestration costs
All three variants of the forecast fit to justify the already announced by the Ministry of Finance a hard budget policy.
The Ministry of economic development for the first time officially confirmed that the election for the summer is the main thesis of the budget of the campaign is not changed, the budget and its impact on the economy are estimated based on freezing expenditure in real terms at the level 15,78 trillion rubles.
From the documents of the Ministry of economic development should be that the budget received only compromises on several issues. The decision about indexation of pensions since February 1 last year’s inflation and the refusal of indexation of pensions to working pensioners from 2017 to 2019.
None of the variants of the forecast provides a soft budgetary policy. The current budget design while trying to achieve targets for economic growth or inflation needs to be tightened.
Recall that the Finance Ministry has already calculated the budget with the mandatory reduction of all costs in years 2017-2019 at 6, 9 and 11%, respectively. “The assessment of income of the budgets of the Ministry proceeds from the principle of the necessity of preserving the stability of tax conditions”, — is spoken in documents of the Agency.
To Finance the deficit will not be able to avoid the use of the reserve Fund and national welfare Fund, raising internal and external borrowings and privatization of state property.
To achieve the parameters of the “target” of the forecast is proposed for “significant structural reforms of the expenditure side of the Federal budget, involving the optimization and increase of efficiency of budgetary expenses and the radical revision of state programs.”
Dmitry Medvedev at meeting on Wednesday made no final decisions about how to use the forecast to justify budget tactics. “We need to make this decision, which will provide a stable and balanced budget system for at least the next three years”, — said the Prime Minister. He offered to “focus resources on priority areas, to support primarily those in the industry, the development of which gives the maximum effect”. But the final choice remains to be done, President Vladimir Putin on Thursday — the government is going to discuss the forecast with the President.
Three scenarios of macroeconomic development
