Russia’s Minister of Finance Anton Siluanov talked about Russia’s budget, pension reform and federal borrowing.
The budget is ‘not easy’, but there are to be no increases to non-resource sectors. However, the non oil deficit is in excess of 10% of GDP and is too wide; it must be closer to 5-6%.
Budget rule. The ten-year average oil price is taken as the basis for spending plans. Next year’s non-oil deficit is to drop 1pp, while in 2014 it is set to slide another 1pp. Fiscal consolidation is important. Siluanov expects the budget to be balanced in 2015. One of the ways to improve the budget would be to increase the efficiency of the public sector.
On pension reform. The pension reform is currently being debated and, based on the outcome of that, it could have a crucial impact on the configuration of fiscal policy. On borrowing. Russia’s federal borrowing is to continue declining gradually so as not to crowd out the private sector. External debt will be kept flat.
On wages. Wages are now bundled into the goszadanie (state order). The agencies, both federal and regional, have the scope to manoeuvre as a result of higher labour productivity. In terms of optimising networks, Siluanov said that underperforming public sector employees could be laid off (we note that this is progressive and overrides the de facto taboo on the public discussion of redundancies).
During the Q&A session, Siluanov confirmed that he expected the property tax to be implemented in 2014 and the Russian Financial Agency to be created in 2013.