The Russian economy is able to grow average rate of 3-3. 5% of GDP per year. However, to achieve this result will take about two years. On Wednesday, 24 January, said the head of the Ministry Maxim Oreshkin. “In the next couple of years we will achieve these numbers,” said the Minister during a business Breakfast at the world economic forum in Davos.
Hard to believe such a prospect with some work. At least because according to the authors of “Monitoring of the economic situation” of the Ranepa in January 2018, by which time a considerable part of Russian regions will find themselves in debt.
It looked like a “black list” of the most debt-ridden subjects of the Russian Federation at the beginning of November 2017: the Republic of Mordovia, Khakassia, Karelia, Kabardino-Balkaria, Udmurtia, Kostroma and Smolensk regions. Now more of them — in December have the basic cost of paying for state contracts.
Note, the regions began to increase its expenditure due to the implementation of the “may decrees” the President Vladimir Putin in 2012. Along with increasing obligations for this period had the economic slowdown and the decline in their income. Gradually the government began to remove the subjects from the debt hook, replacing commercial loans with government loans, which were issued at the rate of 0.1%. But from 2017 the rules have changed, and the volume of budget loans declined sharply.
Now the Ministry of Finance plans to reduce budgetary credits to the minimum in 2019-2020. To get a rollover not repay loans of 5-7 years, the regions should reduce the budget without a deficit, to increase revenues at rates higher than inflation and to reduce inefficient spending.
Many regions, analysts say, to meet these conditions not. Meanwhile, the duty of the subjects on 1 December 2017 was impressive 2,141 trillion. rubles.
In a situation when budget loans will be less available due to low growth of economy, experts expect that the regions will be forced to increase commercial loans, and further reduce the growth rate.
“We expect to maintain low rates of economic growth in the next three years — on average about 1.5−1.6 percent due to structural limitations, the actions of international sanctions and weak commodity markets. In this regard, in the medium term financial performance of Russian regions may be adversely affected by the declining growth of tax and non-tax revenues and limited the ability of the Federal government to increase budgetary enumerate,” write S&P analysts in the study “Russian regions: during the period may end.”
What will happen to the economy of the Russian Federation when the regions will transform from a stone on the neck in the driver of growth?
— Russia in the near future is not threatened even come close to the growth rate of 3-3. 5% of GDP, — said the President of the Union of entrepreneurs and tenants of Russia Andrei Bunich. — No, in my opinion, a single trigger, which could accelerate the Russian economy. On the contrary, there are many circumstances that limit its growth.
First of all, the exhaustion of the low base effect. Talking about it today — more than modest growth, despite the fact that the price of oil rose more than 2 times. Add here a huge underfunding and underinvestment in the Russian economy. Moreover, the investment pause is still not over, and it is still unclear how the government will resolve this issue. The state investment has no funds, and private money so far only go from Russia.
There is also the factor of tapering consumer demand. This tendency, apparently, will only increase. Judging by the statements of the economic block of the government, after the elections, the presidents authorities will take a budget maneuver, which will cut social benefits, plus supposedly will be a whitewash of the economy with new taxes. It is unlikely that such a maneuver would spur consumer demand.
On this background, talking about some of the growth drivers do not have to.
“SP”: — What measures, in your opinion, would stimulate growth?
— Major change in tax laws. Today, the United States is a developed country reduces taxes, and we are a developing economy — follow the way of their increase. It’s totally weird, because we have now the tax burden is excessive, and only discourages business.
Need and reform monetary policy to remove regions with subsidized needle. Regions, I believe, should be given much greater autonomy. They should not transfer virtually all of their funds to the centre so that the centre then distributes the money between the actors — is absolutely corrupt scheme. A system in which regions it is profitable to go behind, an urgent need to change — but no one to do it is not going to.
Today, the balance of about 60 regions of the Russian Federation are in the red, plus they are burdened with debt, and are forced to let a significant portion of revenue for repayment of loans. The worst is the situation when the regions are sitting on the subsidies of the center, took a chronic character, and the local elite to adjust to it.
Add fuel to the fire and banks that do not perform the function of investments. Is, moreover, the creeping nationalisation of the banking system and the risk here is that the insured person may behave even more irresponsibly than the person who does not have insurance. We have now all the banks are insured, and all losses which may make the bankers, paid for in advance. In the end, the banking system does not work on development.
If we talk more — all of our financial system, I believe, is not able to accumulate funds within the country for investment purposes because it is archaic and inadequate to modern challenges.
“SP”: — How the reality is to grow the economy of the Russian Federation?
— I do not see any good prospects for growth. Moreover, in case of changes in the world market — some crisis in the world markets, which most economists expect just in 2018 — the Russian economy could return to negative growth rates.
In this case, I believe, will begin again problems with the ruble, and the government will have to plug holes in the budget of equity financing, not the accumulation of reserves. This, in my opinion, much more likely scenario than the optimistic GDP growth rate, which predicts Maxim Oreshkin.