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Tatyana Golikova: Russia to brace for austerity budget

October 12, 2015, 8:00 UTC+3

Russian Audit Chamber chief in TASS special project Top Officials

5 pages in this article
© TASS/Stanislav Krasilnikov

In TASS special project Top Officials Russian Audit Chamber chief Tatyana Golikova speaks about corruption, irresponsibility, fears, limited resources, geography and Russian literature classic.

About the ability to stay unbiased, current concerns, manual control, milking the cash cow, corruption, irresponsibility, satire and humor

 Everybody now seems to understand the ‘affluent years’ are long gone and the time to tighten our belts is round the corner. In the meantime, the national economy is still very slow to readjust itself to the new realities. Do you have any plausible explanation why?

Let me see, that’s a really hard nut to crack… As far as the federal agencies are concerned, the current state of affairs is really critical only for two government ministries – those of economic development and of finance. Both gauge the status quo with reliance on objective parameters. Both are well aware of the degree of the responsibility for what is going on. They will be the first to be brought to account. The other government ministries and agencies that use federal resources, and not only federal ones, haven’t yet realized well enough the landscape has changed. In principle, this is easy to explain, too. For the time being the economy has enough money to push ahead with development processes, the processes the funding had been accumulated for. But mind you, “for the time being” is the key phrase. People go on living the usual way as if everything remains calm and bright. Many still don’t care a bit about cutting costs. They keep spending with a lavish hand and never care to review and report the previous expenditures.

Russia is entering an austerity budget phase and it will have to be selected what should remain on the list of priorities

 What if they have the delusion the budget is a cash cow that will never stop yielding milk?

Yes, I do have this sort of impression. A while ago I hoped the attitude would change. It hasn’t. Possibly, summer time is to blame. Business activity died down for the holiday season. It looks like far from everybody has been able to feel the autumn chill is approaching. In October, one and all will have to recall the responsibilities. Life will turn us that way.

 Was the picture greatly different a year ago?

I wouldn’t say that if the execution of the federal budget is to be used as the yardstick. The government then failed to forecast incomes accurately enough, and the available means were spent not very effectively sometimes. One has to admit, of course, that in September 2014 the crisis was not as deep as it is today, although people in the know already saw the real degree of the risks the sanctions against Russia, slump in the world prices of hydrocarbons and the related processes would entail.

Of late, a great deal has been said about the ineffectiveness of the system. Everybody has got accustomed to the manual control mode, don’t you see, some claimed. To my mind manual control can be very useful at times. Once you have special powers, a clearly set task and the money to handle it, then go ahead and take it to the logical outcome.

Honestly, I do feel certain alarm over the situation in the economy. Most of the expected regulatory acts have been issued by now, while there have emerged some problems with using the material resources earmarked for their implementation. Far from everybody has been invariably effective enough.

 For instance?

Let’s take support for the Russian automotive industry. I am dealing with it closely among other things. Everybody knows car sales in Russia have slumped. You don’t even have to take a tour of local car dealers to see that. Just look at the official statistics. To support this key industry the government has devised a package of measures, such as scrappage programs, trade-in schemes, beneficial lending and leasing. Similar steps were taken during the 2008 crisis, which then brought about the expected economic effects and kept our automobile producers afloat and helped them live through the bad times. In the current anti-crisis plan 40 billion rubles has been reserved for assistance to domestic automotive producers, including 10.7 billion rubles for car fleet renewal. We won’t be discussing now whether this is much or not. The money is there. But! By September 1, 2015 a tiny 1.6 billion of the sum had been spent. The program has been implemented just 5%! Now may I ask you: is this what one calls support? In reality there is none. Sadly, such examples are many.

Sometimes it is difficult to get rid of the feeling of irresponsibility when using budget money

 How many inspections does the Audit Chamber make a year?

Some five hundred. We aren’t trying to make more. We are obliged to present economic conclusions regarding the previous year’s budget execution and the coming year’s draft budget. That’s standard procedure. All chief managers of government moneys come under scrutiny. Everything else is day-to-day activity. In 2015 the government is implementing its anti-crisis plan. The money for it is disbursed from the National Welfare Fund. Naturally, we keep monitoring the situation online.

 And who decides who will be the next to answer your question: “Where did the money go? What was it spent on?”

It is not me personally who asks such questions, but the Audit Chamber… There are instructions from the president and requests from the Federation Council, the State Duma, and the law enforcement agencies. Also, there are complaints from individuals. The latter are usually considered by the auditing agencies operating at the regional level. Except for certain instances in which the issues raised are of national importance.

 Have there been any inspections that found nothing wrong? Situations where nobody had to be criticized for anything?

Violations exposed are very different. There have been no cases in which we identified not a single flaw or shortfall. But they have to be sorted out, of course. I reckon that some ten percent of our findings can be classified as “light”. In other words, the exposed violations do not lead to either ineffectiveness or misuse of budget money. Such wrinkles are easy to iron out. That’s normal, routine work. As you know, only the one who does nothing makes no mistakes.

Regrettably, the scale of corruption remains high. This is one of the main problems. Also, I would add a high level of irresponsibility

 Are you saying that 90% of your probes end up with a Test Failed mark?

Well, it’s not all that bad, of course, but… Yes, that’s right. Regrettably, the scale of corruption remains high. This is one of the main problems. Also, I would add a high level of irresponsibility.

 Before, the cash stashed for a rainy day came in handy. Now the savings are running dry and the problems have begun to surface, right?

In a sense, yes.

 Would it be right to say that theft hasn’t got worse but it has become more eye-catching?

I never use the term “theft.” I’m more cautious in selecting my vocabulary. We expose facts that may indicate likely abuse. Naturally, all our information goes to the law enforcement agencies, and it is up to them to decide what is to be done to the evidence they have from us. When corpus delicti is unmistakably there, the affairs are investigated in accordance with the established procedure and then handed over to a court of law.

But let me say once again, sometimes it is difficult to get rid of the feeling of irresponsibility when using budget money. People may treat the funds as if they were somebody else’s.

 Possibly, it’s the other way round?

No, when it comes to one’s own hard-earned cash, people are very careful whenever they decide if it is to be spent on some things or set aside for the time being.

 You are a great devotee of Russia’s 19th literature classic, Mikhail Saltykov-Shchedrin, a remarkable author and satirist, an equal of Jonathan Swift. I guess that the following quote from this author is well familiar to you: “Has there been a time when at least a single bureaucrat was uncertain Russia is a pie anyone is free to come up to and take a bite at?” That’s just my side thought, a footnote to what you’ve just said about civil servants’ attitude to the state budget. They just come up and take a bite…

Possibly, you’ve got a point there. Sadly, at my previous positions at the Ministry of Finance, and now here, at the Audit Chamber, I can see that expectations of the budget are always very large.

It takes political will to put an end to useless and senseless spending. Sometimes there is not enough such will. One’s got to have the knack of putting the full stop at last

 The rule is “Ask for as much as possible to get at least something in the end?” isn’t it?

No, task number one is to get into the budget somehow on the pretext of performing some official task. Not necessarily a major or important one. At the very beginning the start-up sum may be very small. Let me say once again: it’s all about having a special budget item reserved for oneself. That’s number one objective. The faster you go, the farther you get. The task has been identified. Who will ever care it has not been coped with? It would be wrong to stop halfway. So the finding goes on and expenditures keep snowballing. The things that cost a ruble yesterday now cannot be accomplished for ten. It’s not enough. And then, when everything seems to have been done and no more money has to be reserved in the budget one suddenly feels it’s so hard to say good-bye to this bonanza! So, ever more projects continue to be invented. For not dropping out anything goes.

Regrettably, the budget is getting overburdened with this type of spending with each passing year. The money may have been earmarked for no end of good things, but no effect is in sight. It takes political will to put an end to useless and senseless spending. Sometimes there is not enough such will. One’s got to have the knack of putting the full stop at last. Whether the original undertaking has been accomplished successfully and the desired goal achieved is a different matter. But it cannot be procrastinated indefinitely. Some are still hoping for something, waiting for it to materialize, although everything is already clear to one and all…

 Do you really think the loophole will now be plugged?

There must be certain firmness when a decision is made whether to include this or that spending item into the budget. We may keep talking about this subject days on end, discussing what exactly the government is responsible for, whether it should support the economy, industries and farming or the population. At a certain moment, as you may remember, the prevailing ideology was the free market economy will sort things out and fine-tune all processes on its own, while the government’s realm of responsibility will be confined to pensions, budget-financed wages and social benefits, as well as participation in infrastructure projects that would otherwise be unable to operate. Then we drifted away from this type of approach. The government is now locked in debate over where to move now. Clearly, Russia is entering an austerity budget phase and it will have to be selected what should remain on the list of priorities – the government’s full compliance with the previously assumed social commitments or the possibility of dropping some budget articles to make investment into infrastructures.

The way I see it, this argument is devoid of any sense by virtue of the current money managers’ attitude to the money they manage.

The people pay taxes and they have the right to know whether somebody will be brought to justice for all that someday. For what I call corruption and irresponsible squandering of funds

With social benefits it’s far simpler. They are clear and easy to calculate and count. The recipients are well-known. One simple multiplication — and you get the amount of budget resources needed. But many are still reluctant to make a real assessment of how the colossal funds, spent on industries, on support for framing and on infrastructural development, were used at different times. We take it too easy when we learn that the money did not yield anything for the economy but remained idle in the banks or on the accounts of various subcontractors.

As far as social justice is concerned, people deserve to be explained what is being spent and on what. In the meantime, the people see mothballed construction sites, bad roads and the appalling condition of the housing and utilities sector. The people pay taxes and they have the right to know whether somebody will be brought to justice for all that someday. For what I call corruption and irresponsible squandering of funds.

All speculations to the effect we will cut social programs somewhat here and just a little bit there arouses natural questions from the people. Naturally, some restrictions are unavoidable, but they have to be reasonable and explainable. There must be a clear and transparent policy along all lines.

About the opposite sides of the barricades, jobs done at the Ministry of Finance, Kudrin’s habits and government competencies

About fears, limited resources, cold shower, taboos, 2014 Sochi Olympics and 2018 World Football Cup

About too few positive emotions, simple and complex solutions, tactics and strategy, diseases and cures

About geography, An American Tragedy, cats and dogs at home and Russian literature classic

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