Russia may run a deficit-free federal budget this year, Finance Minister Anton Siluanov told a meeting with foreign investors in Hong Kong on Friday.
“We have a small budget deficit. Last year, it stood at 0.5% of GDP. This year, we expect to see about the same rate,” said the minister.
“I think we can even execute a deficit-free budget in 2014 whereas in other countries with emerging markets we see quite stable budget deficits,” he added. It was evident that Russia had a satisfactory current account and budget balance.
Finance Ministry estimates budget revenue at 13.02 trillion rubles, or 100.9% of what was planned for the reporting period. Spending totaled 13.33 trillion rubles, or 99.6% of planned expenditure. Primary surplus stood at 49.78 billion rubles.
Russia plans conservative policy
Russia will draft “responsible and conservative” policies to achieve economic growth of about 3% a year, Anton Siluanov said.
“GDP per capita in Russia is considerably above the world average. On the other hand, our demographic trends are not as strong as in other countries with emerging markets,” said the minister, adding that although this year, Russia had recorded the first natural increase in recent times, “in this respect we still lag behind emerging markets.”
Target growth of about 3% was not “easily achievable”, he said. Russia had come far since the financial crisis in 2008, Siluanov said, citing “a whole range of important structural reforms”.
These included the switch to the policy of inflation targeting and a flexible ruble exchange rate fluctuating within the currency corridor set by the Central Bank. This had taken rates into positive territory and brought stability.
“Fast growth in budget spending ceased and the budget is now regulated by rules,” Siluanov said. “We determine a spending ceiling we can afford using a method connected with the price environment over the last 10 years.”
The minister noted a reduced level of dollarization, a ruble increasingly popular domestically as a currency for both saving and spending, and foreign currency debt at a low level.
Measures the government had taken to foster a comfortable business climate had “already been reflected in the World Bank’s Doing Business ratings. Russia had taken several steps forward, moving from 120th to 92nd place. Policy was being improved to support small and medium enterprises, providing them with access to procurements and stimulating lending, the minister said.