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Dangers of second wave of crisis are underestimated

June 23, 2012, 15:35 UTC+3
Kudrin said that a serious discussion of key global problems had taken place at the forum
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ST. PETERSBURG, June 23 (Itar-Tass) — Russian ex-finance minister Alexei Kudrin said on Saturday that some participants in the International Economic Forum in St. Petersburg were underestimating the danger of a second wave of crisis.

Kudrin said that a serious discussion of key global problems had taken place at the forum. “At the same time, the situation in the global economy is much worse than it was estimated. The mechanisms of a second wave of crisis have been launched. Europe will face a recession this year,” the Russian ex-finance minister added.

“A rescue program ought to have been taken to save the European economy. There’s no program and there are no decisions while the crisis is entering a very complicated stage. The crisis is gaining momentum at such a pace that it will be impossible to soften its consequences no matter how many funds we are going to invest,” Kudrin warned.

He believes that Spain’s banking sector will be a major problem for the euro area in the next two or three months. The Spanish population has already started withdrawing money from their deposits. EU subsidies won’t be enough to save Spanish banks.

“One hundred billion euro is certainly not enough. Additional measures, both monetary and organizational, interaction mechanisms and possibly additional guarantees are needed. In short, deposits should be insured,” Kudrin stressed.

Speaking about private companies in Russia, Kudrin said they should be allowed to build infrastructure facilities in the corridors of the International Economic Forum in St. Petersburg on Saturday.

He said that all infrastructure objects built by private investors should be available to all. “However, all revenues from using these facilities should go into the owner’s pocket,” Kudrin explained.

He warned about the danger of increasing state spending on the construction of infrastructure.

“In the next two or three years we will become convinced that we are unable to maintain the spending at a level that we have announced. The budget has been balanced with account of 115 dollars per barrel of oil. That is why it’s simply impossible for us to build up expenses,” Kudrin said.

The former finance minister suggested cutting subsidies to business enterprises which currently account for about 2%-3% of the GDP and redistribute the funds for the construction of infrastructure objects.


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