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Friday, October 28, 2016

There is a way out: Putin will teach you how to pull the economy out of the crisis

On 25 may, the Minister of economic development Alexei Ulyukayev and former Finance Minister Alexei Kudrin will present to Vladimir Putin’s new economic program. They intend to achieve average annual growth of 4% by 2019. To achieve the purpose, inter alia, having conducted modernization of public administration and reform of the judicial and law enforcement systems.

photo: Natalia Gubernatorova

Not spared the authors also pension. They propose to raise the retirement age and thereby to save on welfare benefits. Why would the proposals by Kudrin and Ulyukayev, “MK” asked the experts.

– Indeed, the situation is such that without long-overdue reforms, no growth to achieve simply will not succeed, says Maxim Smooth-Rodionov, General Director of audit company “Confidence”. – The main problem is not so much the lack of money, but rather in the reluctance to invest, due largely to a persistent neglect of the task of creating a comfortable business environment. Already rather well-thumbed words about the rule of law, equality before the law and the courts, ensuring fair competition, minimal government interference in the economy, although many had lost all meaning from sheer repetition, however, really are a good recipe for economic development. But we all understand that a system based on entirely different principles, are unlikely to radically change itself. Accordingly, before the authors had a very difficult task – how to change everything without changing anything? I think that’s why the creators of the program did not analyse the reasons for what is happening and to seek ways of eliminating those causes, and was limited to a search of reserves that could be used here and now.

What is offered? Firstly – increasing retirement age to 63 years. Savings for the budget will be very significant for men to wait for retirement will have three years, and women – as many as 8 years. Moreover, Ulyukayev believes that in this way the country will win labour shortages. How does this relate to rising unemployment and the current measures of actual coercion of working pensioners to stop working, not very clear.

Moreover, it is unknown whether the current level of health to maintain full operability over the age of 60. The second source of investment funds on accounts of enterprises. Russia has for many years been an exporter of capital. Therefore, we can conclude that investment conditions we have, to put it mildly, not optimal. In recent years, along with rising inflation, sharply increased political risks. The actual failure of the initiative on Amnesty is clear evidence that the risk of investing in Russia is excessively high. How, then, to encourage enterprises to invest? I’m afraid that in such a short period of time (the authors believe that the rate of growth of 4% Russia is trying to achieve by 2019, the ninth year) – only methods of extra-economic coercion. The third measure is state investment, primarily to support exports.

As estimated by the Ministry of economic development, growth of 4% possible if investment will grow by 7-8% per year. Moreover, for the same level of consumption. In other words, a new breakthrough, the need for which is fully due to the errors and miscalculations of the authorities, are requested to pay us – the citizens of Russia.

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