The Russian government should use the National Wealth Fund to support large-scale projects that change people’s lives, Prime Minister Dmitry Medvedev said in the State Duma 9lower house of parliament) on Tuesday.
“We are obliged to maintain the largest projects that change lives of people in the North, in the Far East and Siberia. Such projects receive support from the National Wealth Fund,” he said.
Three-year budget planning
Russia will return to three-year budget planning, Medvedev went on to say.
“We are returning to three-year planning. This provides us with more clear vision of prospects,” Medvedev said.
Government will not propose budget amendments during spring session
Accordinng to Medvedev, the Russian government will not make amendments to the budget during the spring session.
“We’ve managed to avoid adjusting the 2016 budget, although at the beginning of the year such a move looked inevitable,” he said. “We will not propose budget amendments during the spring session.”
The two tasks were addressed in parallel with the need for keeping the budget deficit within sensible limits, stabilizing the situation on the financial market and controlling inflation. According to his estimates, the 2015 budget deficit was within an acceptable 2.4% of the GDP, 50% below the crisis level of 2009.
“We will maintain the budget deficit at an economically safe level further on,” Medvedev promised. “Recapitalization of lending institutions has stabilized the operation of banks. Deposits outflow has been reversed into influx. Banks have been increasing lending to the economy, although not at a pace we need.”
Share of non-oil revenues in budget rises to 60%
The prime minister pointed out that the share of non-oil budget revenues had risen to 60%.
“The structure of our budget revenues has changed. The share of non-oil budget revenues, not related to the sales of oil and gas totals around 60%,” the official said. “For the most part, it is connected with the decline of energy prices. At the same time, the measures that we have taken, worked,” he added.
Russian government won’t increase taxes until 2018
Medvedev noted the government plans to maintain the current size of taxes for the next two years.
“Today, when the price of oil has fallen, there is a temptation to increase budget revenues by raising taxes, but our position is fundamentally different. We don’t plan to increase taxes until 2018,” the Prime Minister said when presenting a report in the State Duma (lower house of parliament).
“Nobody needs the return of salaries in envelopes (unofficial salaries which imply tax evasion -TASS) and an increase in capital outflow,” he added.
Speaking about expectations of businesses, Medvedev mentioned predictability of the government’s actions in particular in terms of tax policy.
“Businesses simply want the state not to hamper their work and not to bother them with checks,” he said.
According to Medvedev, by now the government had managed to remove many of state regulation barriers.
“We worked on the “roadmaps “of the National business initiative, simplified procedures in construction sector, registration of property rights, connection to power grids, in tax and customs administration,” the Prime Minister said.
Russia has shown steady progress in the rankings that evaluate the business environment,” he said.
For example, in several years, Russia has moved up from 120th to 51st position in the World Bank’s “Doing Business” (Doing Business) rating, Medvedev said.
Oil prices collapse shocked Russian economy
According to the head of government, the oil prices collapse heavily shocked the Russian economy.
“Several adverse factors at once strongly impacted our economy,” the Prime Minister said. “Low prices for oil and other commodities” is the first among them, he said. “The point is in the speed of collapse and not merely in the depth of their decline – oil prices declined nearly a half in six months; this is an unprecedented record,” Medvedev added.
“Not a single economy is capable of quickly adapting to such a dramatic decline of export value,’ Medvedev said. “It heavily shocked the Russian economy also,” he added.
The “outside sanction pressure” was also a negative factor, Medvedev said. “The door to a significant portion of international credit resources and the modern technologies market is still closed for Russia,’ he added.
The factor of “instability and poor predictability of global markets more and more subdued to political laws instead of economic ones” also played its role, Medvedev said.