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Tuesday, March 20, 2018

The working group on the reform of the Russian economy had written “seditious” program

On behalf of Putin now developed several alternative programs for socio-economic development of Russia. As we know, one of the key points of the outcome document may be the failure of the current policy of “inflation targeting” in favor of the mode of stimulation of economic growth with unprecedented tax incentives for business. Interestingly, in the composition of the working groups includes representatives of the Ministry of Finance, Ministry of economic development, industry and trade and the Central Bank.

photo: Natalia Muslinkina

Developing new programs for the government are now engaged in two major groups: the Center for strategic development Alexey Kudrin and the participants of the “Stolypin club” which includes large entrepreneurs, economists. Competed at Olympic games.

If Kudrin promised to show the project only in the spring of next year, “stolypins” will present its version in the fall. And their program is being finalized in conjunction with all key ministries and agencies. Therefore, the alternative it can be called only partly true.

Recently held a regular meeting of the working group, which was voiced quite “inappropriate” proposals. If they are included in the final document, it will mean a 180% of the entire economic policy with the subsequent inevitable change of leadership of the government.

Let’s start with the fact that the working group was clearly stated that the causes of the current crisis associated mainly with internal factors. When it was discussed about the export-oriented structure of the economy, about the failed response of the authorities to the fall in world prices for “black gold” at the end of 2014, resulting in the collapse of the ruble exchange rate.

Also “bad” word mentioned a sharp increase in Central Bank key interest rate, forcing businesses to further limit its investment and productive activity.

According to experts, overcoming all these negative phenomena is possible only with a radical change of priorities of the state monetary policy.

In the conditions of low monetization of the economy, when in Russia the ratio of broad money to GDP is equal to only 45% in China 195%), the Central Bank without fear of a significant increase in inflation can easily double this figure. Emission volume of not less than 1.5 trillion rubles a year should be aimed not at the growth of government spending, and stimulate investment in the real economy. The result is a version of the American policy of “quantitative easing”.

As indicators of saturation of lending proposed to increase the share of mortgages in total volume of transactions in the housing market from 24.6% to 45%, while sales of new cars on credit to reach 60%. The interest rate on commercial loans by 2020 should be no more than 5-7%, and by 2025 3-5%. Plus make the mechanism for the use of rubles in payments for Russian exports.

For new productions in the program proposed to include a number of provisions concerning the reduction of fiscal burden. In particular, to introduce tax holidays of up to 5 years to pay tax on profit, property, land for investment projects. To make a tax credit for 25% of the cost purchased new equipment for all types of tax payments and import duties, to establish a regressive scale of social insurance payments depending on the level of productivity in the enterprise.

Finally, the members of the working group is not against the introduction of so-called “offshore” ratio – 200% on the tax on property, land, real estate, dividends, cancellation of VAT refund when exporting for companies with offshore owners or engaged in export-import operations with offshore companies.

Don’t forget about the tariffs, which increased gradually to limit to 2-3%. It does not prevent, for example, under the pretext of the modernization costs, any deviation from these targets.

In addition, the developers of the program want to enter in the commercial of unused state land assets. This will require the inventory of all Federal, regional and municipal property.


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