Fiscal policy in 2017 will bring economic growth to zero. Thus, by 2020, the Finance Ministry proposes to withdraw oil and gas revenues to reserves when the price of oil over $40 a barrel. The lack of economic reforms and attempt to resume the fiscal rule will lead to the eventual degradation of the economy, experts say.
The budget is calculated in terms of difficult to reduce military spending, is not conducive to economic growth. This follows from the final version of the macroeconomic forecast of Ministry of economic development sent on Tuesday to the government. The Agency, agreeing after a long struggle to take into account budget parameters for inflation and exchange rate of the dollar in 2017-2019 advocated by the Ministry of Finance and the Central Bank significantly downgraded its forecast for GDP growth in the three-year period.
In 2017, GDP will change within the statistical error of 0.2%. In 2018 the situation will improve and growth will be 0.9%. And only in 2019 the economic growth can swing in the direction of 1.2%.
The lack of economic growth economic development is linked to the budget policy proposed by the Ministry of Finance. In order to balance the budget in terms of annual deficit reduction by 1 percentage point, the Finance Ministry insisted on the immutability of the parameters of inflation (4% per year for all three years) and the weakening of the ruble to 67.5 rubles per dollar in 2017 to 71.1 rubles per dollar in 2019.
Finance Minister Anton Siluanov has recently recognised that these forecast figures provide a budget about 200 billion rubles of income compared to the alternative that produces greater economic growth.
The previous forecast, the Ministry had proposed as the main budget calculations, provided GDP growth from 0.8% in 2017 and 2.2% in 2019. Such indicators were achieved under the condition of gradual reduction of inflation from 4.9% next year to 4% in 2019. The national currency, according to the Ministry of economic development, and the need was not to weaken but to strengthen — to 62.7 rubles per dollar in 2019.
In real terms, the macroeconomic argument was expressed by the so. Budget spending has failed to freeze to the target annual level of 15.78 trillion in years 2017-2019. Budget spending in 2016, which all summer the government was preparing to sequestration, increased overall by more than 300 billion rubles. While this year the same amount has decreased the cost on all open budget items — social and investment. The result is more than 600 billion rubles were transferred for financing of the state defense order.
Spending budget 2017 also did not meet the target 15,78 trillion, constituting 16.2 trillion.
While the Finance Ministry assumes that the state defense order in 2018 and 2019, will be reduced on 1 trln rbl. a year. But the signals that the defense Ministry agreed with this policy, the Arbat square has not been received.
The economic development Ministry in its latest variant of the forecast notes that the structure of costs in the baseline forecast is the least favorable. All other scenarios give lower expenditures on debt service and intergovernmental transfers to the pension Fund, mandatory medical insurance Fund and the MLA.
A more favorable structure of budget expenditures provides greater receipts of insurance contributions — according to the Ministry, the freed resources can be directed to the development of the economy. The Ministry of Finance it is objected that a sufficient amount of funds in the state funds will be collected through the centralisation of next year, administration of insurance contributions to the FTS.
The lack of economic growth and, as a consequence, the worst dynamics in the industry while the lack of real wage growth in the forecast is compounded by demographic risks. The working-age population in 2019, could be reduced by 225 thousand people. And in terms of low economic growth will be increasingly difficult to replace workers with migrants — Russia may lose in the migration flow of about 100 thousand people annually. To compensate for these losses is possible only by investments in production capacity upgrades to increase productivity, concludes the Ministry of economic development.
Reducing investment costs with the pre-crisis level of 3.5 times, the Ministry of Finance has built its fiscal policy for the coming three years, including, and on the resumption of budget rules from 2020. It is proposed a variant in which oil and gas revenues again begin to flow into reserve funds when the price of oil over $40 a barrel. By this time, however, will be fully spent accumulated in previous years, the resources of the Reserve Fund and national welfare Fund not related to infrastructure projects.
Available reserves, as in previous crisis years, Anton Siluanov explains the small and disproportionate reduction neubronner budget expenditures.
On October 1, the Reserve Fund is estimated at 2,04 trillion rubles., NWF — 4,6 trillion On budget projections, in 2017 the planned use of reserves in the amount of slightly less than 2 trillion rubles, in 2018 — 1.2 trillion rubles., and in 2019 is already less than 0.2 trillion roubles That is, next year the Reserve Fund will be exhausted, and to cover the Federal budget deficit will need to involve the NWF, the amount of liquid assets which by the end of 2019 will amount to around 0.8 trillion rubles.
On Monday, the public Council of the Ministry of Finance, which discussed the main directions of budget policy, Ministry of economic development of the objection was sustained only as the rector of Ranepa Vladimir Mau. According to the academician, “normal growth is the goal of fiscal policy”. Mau advised to Anton Siluanov, not to succumb to provocations, to avoid the “target growth rate”.
“We used to say that Russia’s economy should grow by 5% per year. Last year, we said minus 3% and thank God, it could be minus 5%,” — said the academician. Mau believes that the debate on the resumption of the fiscal rule boils down to the usual argument — “to get away from reform, while there are reserves.”
“The ideology of the discussion of fiscal rules: before we saved up to three years was nothing to do, and now we scopem enough 10 years to do nothing and put the economy completely,” — said the rector of Ranepa.
In his opinion, there is only a difficult policy prescription is to move away from the ideology of the reserve in the ideology of withdrawals not related to productivity.
