The Russian Finance Ministry has suggested 5% budget cuts in 2017, Finance Minister Anton Siluanov said Thursday. According to the minister, Russia’s budget deficit next year will stand at 3.2% of GDP.

“Certain items to be consolidated are items unrelated to salaries, social payments, pensions, and are not first-priority expenditures. They total about a third of all budget expenses and are offered for consolidation at the rate of 5% in the next year,” Siluanov said.

The Finance Ministry will prepare budget parameters for expenditure cuts, he added.

“The key points here is the amount of expenditure and the amount of the budget deficit for the next year. When we formed approaches to the budget for the next three-years, we proceeded from the level of nominal spending which will develop this year. It is 15.785 trillion rubles, and the budget deficit level of 3.2% GDP for the next year,” Siluanov said.

The main goal of the Russian budget policy for coming three years is to lower accumulated imbalance. The ministry is going to cut budget deficit by 1 percentage point annually in order to reach the minimum level by 2020 and to cut the part of the budget deficit which is not related to oil and gas sector by 50%, in compliance with the order of the president.

“Our main objective for the next three years is to reduce the imbalance accumulated lately. This is because revenues in nominal terms are declining, even in 2017 as compared to this year level,” the minister said.

Russia’s budget revenues decreased by 12% in the first half of the year, the deficit amounted to about 4%, he said.

“In general, in the first half of the year we see a decline in revenues compared to the corresponding period last year, it is a little less than 12%. The budget deficit was over 4%. First of all revenues in oil and gas sector reduced significantly, by about one third. However, we are still able to fulfillment all our obligations,” the minister said.

According to Siluanov, in order to fulfill the commitments reserves and in borrowings in the market are used.

“We see that the revenue base is formed under the pressure from a sharp decline of oil and gas revenues. So far, the deficit is higher than was planned for the current year,” he said.

The budget for the next three years is aimed at creating conditions for mobilization of domestic revenue sources, particularly on account of private investments and stable macroeconomic conditions, Siluanov added.

The ministry also expects to attract new investors to the Russian market in 2017.

The borrowings program of the Russian Finance Ministry will be delivered in full amount this year.

“The borrowings program is implemented this year and will be completed in full scope. We see higher interest in government securities. As you are aware, we have lately used the whole series of new borrowing instruments interesting for investors. These are the inflation peg and the Ruble Overnight Index Average, the so-called RUONIA, which enjoy demand,” Siluanov said.

“The volume of net borrowing is growing, and the volume of borrowing even our target parameters for the next year will increase 4-fold. This is a big burden on the market, as money from banks and finance companies will be redistributed through the budget, and invested in these securities,” Siluanov said.

The minister added priority social obligations will be implemented in full.

“We will have to work on effectiveness of the expenditure part of the budget. My colleagues said today that we really need to reconsider some of our program commitments, without affecting the commitments on priority social obligations. They will be implemented in full,” the minister said.

According to Siluanov, Russia’s Finance Ministry hopes that share of foreign investors buying Russian securities will grow in 2017.