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Wednesday, October 26, 2016

At the government meeting it became clear, how to spend the Reserve Fund

Dmitry Medvedev on Thursday denied his own statement that “no money”. “Despite all the difficulties, the budget system in the baseline parameters remained stable and balanced. Reserve Fund amounts to 3.5 trillion rubles, NWF — about 5 trillion rubles”, — said the Prime Minister at the Cabinet meeting dedicated to the results of budget execution for I quarter of 2016. But keep still have: fundamental factors for the growth in oil prices no, but it depends on whether the government conduct a re-indexing of pensions.

Finance Minister Anton Siluanov Dmitry Medvedev shows where to look for money. Photo: government.ru.

The results of the first quarter was better than earlier in the year predicted the bureaucrats themselves. “We see what stopped the fall in GDP, we see that industrial production for the third month in a row remains in the black. There has been a significant slowdown in inflation in the first quarter the prices grew by 2.1%, which is three times slower than the same period last year”, — said the Finance Minister Anton Siluanov. Capital outflows also slowed sharply: according to the Minister, is linked to the strengthening of confidence in the national currency and the de-dollarization of savings. There are signs of optimism in the energy market — the last time prices for major Russian exports are growing, although still significantly behind the budgeted $50 per barrel.

Because of declining revenues from the oil and gas sector revenues in the first quarter amounted to 2.9 trillion rubles or 15% lower than in the same period of 2015.

In the future the situation is unlikely to improve. “The fundamentals for growth in the price of oil there,” — said Siluanov. But Medvedev recalled that in a similar way the situation developed in the past year: in the second quarter, oil prices seem to start to go up, encouraged by the government, and then again fell sharply in price. Experts have calculated that if the average price of oil in 2016 will be formed at the level of $40, the budget will lose 1 trillion rubles, at $35 — the shortfall would amount to 1.3 trillion rubles.

Continued instability makes the Cabinet to pursue a tough fiscal policy. Expenses in the first quarter amounted to 3.5 trillion rubles is less than the targets. The deficit, therefore, managed to keep within 3.3 percent of GDP. The Ministry of Finance does not hide that belt-tightening had everything. Ahead were financed only the cost of national defense. However, even the security forces received substantially less than expected, and 30% of the annual amount of resources, against almost 50% in 2015. However, the worst case with investment, subsidies, and subventions. Under these articles, the Ministry of Finance of money in the first quarter practically has not allocated expenses amounted to 11.8% and 12.9% of the annual target), which has provoked sharp criticism of politicians and experts. Thus, the head of the Federation Council Valentina Matviyenko in the presence of Putin urged officials to immediately give the money to the regions, and members of the presidential Economic Council, recently held in the Kremlin, called the growth of the investment (including state-supported infrastructure projects) the main factor of economic growth. However, Putin himself, as later told reporters the meeting rather inclined to austerity pursued by the Ministry of Finance, and is afraid to touch the reserves. The more they melt away.

According to Siluanov, in the first quarter, the government managed to do without the use of the Reserve Fund. However, in April-may to cover the deficit of it had to borrow 780 billion rubles., and the limit of the current year to 2.1 trillion rubles. “We need to do whatever is necessary to stay within the planned amount”, — he stressed. Medvedev said he supported the approach of the Ministry of Finance to constrain expenditure commitments. The situation, he said, “has both positive and disturbing dimension, but in General “characterized by a high degree of uncertainty that you need to consider for the future.” Nevertheless, the government is not abandoning the idea of re-indexation of pensions: the decision will be made after the next report of the Ministry of Finance, which will present the results of the first half, said Medvedev.

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