Author Andrey Degtev — the expert of the Center sulakshina
Yesterday a meeting of the Presidium of the Economic Council under the President. Due to the extensive advertising of this event in the media audience might seem that the meeting had to make a landmark decision about ways of an exit of Russia from crisis. In fact, despite the clash of concepts, no real discussion could not be. A key decision was made by the President a week before the Council.
May 17, by order of the President in the Economic Council was created by the working group “Priorities for structural reforms and sustainable economic growth” under the direction of Alexei Kudrin. This working group will develop economic strategy up to 2030. And two weeks earlier, Kudrin was appointed Deputy Chairman of the Economic Council under the President. Given the fact that the Council is headed by the President, not being an economist, the main actor in it from a professional point of view, Kudrin has become. He is given freedom of action in terms of developing economic models.
In this light, alternative proposals from the Ministry of economic development and “Stolypin club” looked just as timid attempt to include your original element in Kudrinskaya General line. What are the three competing approaches?
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TIGHTEN THE BELT SADLY
Ideas Kudrin very pessimistic. If to Express them with one word, it is a proposal to tighten the belt. To tighten. Mr Kudrin clearly doesn’t believe in the possibility of economic growth in Russia. Resource for this. The maximum that you can count on a stable GDP growth of 1%. And if so, the main thing, in his view, is to prevent the growth of the national debt and inflation. Hence the desire to limit the budget deficit to one percent. Probably, Kudrin and 1% growth is not a believer — just need at least something to promise to provide a minimal presentation of its programme.
Kudrin would like to see inflation no higher than 4%. So, any measures of monetary incentives also should not be, and then prices will rise. The calculations, of course, show a low relationship between money supply and inflation in Russia, but much the worse for the calculations. Kudrin clearly hold different views.
What is the legendary first Minister of Putin’s eight-year sees the source of growth is the reform of the judicial and law enforcement systems. The direction of thought, of course, correct. It is impossible to achieve high investment, unless there are favorable conditions. And the courts and law enforcement agencies — are precisely those instances which, to a significant extent, these conditions form. But the problem is that their management lies outside the powers of the economic departments of the country. Here we need a much more extensive change in the principles of public administration. If Kudrinskaya program will be just a brochure with recommendations to the Ministry of economy and Finance Ministry, there is no reason to expect from her positive results. In addition, the mode change behavior of power structures is impossible without a real fight against corruption. And it is an encroachment on the foundations of Russian liberal model. Ready Kudrin, who is himself the flesh and blood of that model, to oppose anything liberal class the liberal reformers?
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TIGHTEN THE BELT WITH THE JOY
Offers of Ministry of economic development, in contrast to Kudrino more optimistic. Alexei Ulyukayev believes that Russia can achieve GDP growth of 4.5% by 2019. But it also needs to tighten their belts: to refuse to increase salaries in the budget sector in the period of 2016-2017 years. And given the fact that the traders also largely guided in determining salaries at their level in the budget segment, and outside of the public sector wage growth in line with the strategy the MAYOR will not. To compensate for the loss in wages Alexei Ulyukayev plans later due to the rapid growth in 2018-2019. This rapid growth, according to the Minister, will result from the fact that saving on costs, Russian companies will begin to invest furiously. The investment should help and public assistance from the funds of the national welfare Fund and budget.
The bitter truth of life is that if we accept the strategy of the speaker, then belt, then we drag our feet, but investment growth will still not be. The Minister looks to the future with a romantic optimism. That’s right — he’s a poet. Only a poet can seriously believe that the investments, which hatched in Russia did not exceed 20% of GDP, suddenly jump, but still in crisis. If this had taken some special effort, something that, of course, you would expect. But such efforts in the program, the MAYOR says nothing.
What really deserves attention in the strategy the MAYOR is the intention to promote investment from the national welfare Fund and budget. But considering the rate Kudrin on fiscal consolidation and declining inflation, it is unlikely Alexey Valentinovich boggles. Probably will hinder each investment ruble from the budget.
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INVESTMENT INCENTIVES
The third approach — growth Economy” — represented by a group of experts called “Stolypin club” headed by business Ombudsman Boris Titov. Only he gives recommendations and direct incentives for investment, and not with the game situation or budget. Among other things, Stolypin propose to use the target emissions amounting to 1.5 trillion. RUB each year for five years. The loans must be at low rates and exclusively for the real production. The offer is a lot of complaints on the part of the expert community regarding the danger of inflation and the controversy of the availability of projects, able to accumulate a amount of investment. Won’t go into all the details, but only note that is actually 1.5 trillion rubles — this is not such a huge amount. If you exclude all other sources of monetary growth, the money is not enough even for indexing the money supply to inflation.
Unfortunately, the prospects of the project “Stolypin club” virtually none. Kudrin and the leaders of the Central Bank is afraid of the issue. They see it as the danger of inflation and are ready to counteract refinancing in all possible ways. For example, a similar program in the form of project financing, the Central Bank successfully perverted and actually closed. Probably, in the best case the same thing and expects a “growth economy”.
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A CONSERVATIVE RENAISSANCE
The rise Kudrin is a victory for the conservative team of economic managers. They intend to preserve the economic model that prevailed for the first decade of Putin’s. But that’s the point of preserving it disappeared five years ago, when it ceased to provide stable growth. It would be possible to hold a liberal economy, when there was recovery after a disaster shock 90’s, and when high oil prices has showered the country with petrodollars. But now the train has left. You need to actively build new tools of salvation, not to keep the old out of date mechanisms. You need to reverse and overcome the crisis, and not to adapt to it.
Bright representative of the liberal — conservative wing, Elvira Nabiullina very lucidly described the principle of its policy: “Stability and reasonable care”. How reasonable is the caution of Ms. Nabiullina, can be judged by the actions of the Central Bank in the framework of project financing. The interdepartmental Commission under the Ministry of economic development has approved loans in the total amount of 236 billion rubles. But even these loans were not all issued. First, the Central Bank has set a limit of 100 billion rubles, and in March 2016 and does freeze project financing. At that time, enterprises had to take loans only on 74 billion. The motivations for this are unclear. The inflationary danger of these pathetic 100 billion rubles is not represented. Risks to the Central Bank or banks were minimal. According to most Nabiullina investment projects in the framework of project financing were highly profitable. All of this can be viewed not only as an ardent struggle against all mechanisms of development.
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CONCLUSION
The economic crisis has led to a temporary rise of the proponents of alternative views. Andrei Belousov some time got to be a Minister of economic development. Sergei Glazyev seems to be seriously considered by the President as a candidate for the position of head of the Central Bank. But Kudrin’s arrival was marked by a Renaissance of the old guard. The country is at the mercy of the monetarists and after 2018 they are probably in full swing will start shoving it in a tin of liberalism.
