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Apr 20, 2021
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Every ruble counts: Putin realized that money was running out

Every ruble counts: Putin realized that money was running out

Photo: Stanislav Krasilnikov / TASS

Vladimir Putin demanded from the government the most efficient use of finances that will be allocated for new measures of state support. The President said this at a meeting with the leadership of the government and administration, dedicated to the preparation of an appeal to the Federal Assembly.

“We need … that every ruble be effectively used and go to the benefit of the development of the economy and each individual person, to whose support these funds will be directed,” reads the transcript of Vladimir Putin’s speech posted on the Kremlin’s official website.

Inefficient spending of budget funds has always been a sore point for the Russian economy. At the end of 2020, the Accounts Chamber came to the conclusion that the funds of the Government Reserve Fund were spent opaquely, and the purposes for which the money was spent did not always help to solve current problems or tasks outlined in the national projects.

But if with a huge budget surplus, which Russia had even in 2019, one could turn a blind eye to this, then in the current crisis conditions the problem has become especially urgent. In addition, the US authorities have already imposed the first sanctions on the Russian national debt, if they are expanded to the secondary market or old issues of securities, the state may have problems covering the budget deficit.

Nevertheless, if the president demands to use every ruble for support measures, in other areas the effectiveness of financial injections raises questions. For example, Russian Railways recently admitted that the second stage of modernization of the BAM and Transsib for the export of goods through the Far Eastern ports could rise in price by 40 billion rubles, to 760 billion rubles.

And on April 18, Deputy Prime Minister Yuri Borisov said that in 2025 Russia may withdraw from the ISS project and begin to create a national orbital station, the construction of which is estimated at $ 5-6 billion, or about 400 billion rubles.

However, associate professor of the PRUE G. V, Plekhanova Oleg Komolov believes that infrastructure, science and space are not areas where you need to economize. And in order not to have to count every ruble directed to support the economy and the population, there is a simple solution, but the government is not ready to accept it.

– The government is facing a dilemma – how to overcome the crisis, and at the same time not infringe on the interests of our ruling class. The recipe for overcoming the crisis lies on the surface – it is limiting the appetites of the largest Russian owners and resource oligarchs. They receive unprecedented profits, which their foreign colleagues never dreamed of. We have very low taxes on capital and high taxes on labor. All this allows those who appropriate the resource rent of the Russian economy to enrich themselves.

The way out of the crisis should be associated at least with limiting the resource rent. To do this, it is enough just to increase taxation of the richest part of our society, and then there would be money for all the reforms that are so necessary in a pandemic.

However, the government is not ready for such steps, since by its policy it expresses precisely the interests of this ruling class. Therefore, it is necessary to make appropriate political decisions, although they will be unpopular among the wealthiest strata of our population.

“SP”: – Despite the savings, the government plans to allocate large funds for projects such as the construction of its own space station. Is it correct?

– I don’t see a problem in this. This is a serious scientific project that will have scientific application in the future. I do not think that it is worth saving on this, especially since our science and industry are in a depressed state.

In my opinion, there is no need to take money out of the hands of space and give it to retirement. Rather, you need to take money from Deripaska and Rotenberg and direct them to social needs, and not save on infrastructure and scientific projects that are needed in order for us to increase our competitiveness.

Deputy Director, Institute “Development Center”, National Research University Higher School of Economics Valery Mironov notes that so far the state has no serious problems with filling the budget, and the president’s words are, rather, preemptive.

– There have been many areas of support for the economy over the past year and a half, so it is difficult to fully assess their effectiveness. For example, money was allocated to families with children. They were paid immediately, and, at least, it is clear that they were not mastered by corrupt officials, they were not chased several times through some kind of deals. The further effectiveness of their use depends on the parents.

If we talk about support measures in general, we spent less developed countries on them, about 4% of GDP. At the same time, the decline in our economy was less, in the region of 3.5%. It would seem that since we spent less, but also fell less, it means that the money for support was spent effectively. But this is not entirely our merit, since the main blow was borne by the service sector, and in our country it accounts for 20% of GDP versus 50-60% in developed countries.

At least during this crisis, there was no such insane spending as in 2008-2009, when the state spent huge amounts of money to support bankrupt companies, whose problems were largely associated with ineffective management. It really was a very irrational use of public funds, and now we have avoided it. Compared to the 2008-2009 crisis, funds have been spent more economically.

“SP”: – Do the President’s words about the need to use every ruble efficiently do not indicate that we are starting to have serious problems with the budget?

– We released a report on the situation with the budget in the first quarter, and in fact, it even temporarily turned out to be in surplus. Thanks to the jump in oil prices, more money was received in the first quarter than it was spent. There is no question of any budget crisis.

Yes, for the whole year the budget will be in deficit, that is, expenditures will exceed revenues, but not so significantly. In addition, the Americans have banned their residents from buying our public debt, but so far only on the primary market. On the secondary market, our securities can still be purchased. Therefore, even in terms of loans, the Ministry of Finance can pay off the borrowing plan for this year and cover this budget deficit. So the situation is stable enough for now.

What the president says about the prudent use of funds, in my opinion, does not indicate any budget crisis. This is just an appeal or even a threat to officials, who are made to understand that misuse of funds will be punished.

The President apparently relies on information Alexey Kudrin, who constantly says that in many departments, in the same Roscosmos, money is spent ineffectively. We have many structures that are poorly controlled by state bodies due to the closed nature or the special situation that was knocked out in due time. They need an eye and an eye, that is, increased public, state and market control.

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