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PM: Russia cannot afford "living on credit time and again"

October 13, 13:52 UTC+3
The prime minister has also pointed out that Russia’s budget for 2017-2019 is based on a conservative macroeconomic outlook
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© Dmitriy Astakhov/Russian government press service/TASS

GORKI, October 13. /TASS/. Russia cannot afford living on credit all the time, Prime Minister Dmitry Medvedev said at the Cabinet meeting on Thursday.

"We should act very prudently. We cannot afford living on credit time and again, as certain countries do," Medvedev said. The deficit should be lowered by 1 percentage point of GDP annually and revenues need to be gradually aligned with expenses, he added.

"These are the main figures of the 2017 budget parameters - revenues of 13.4 trillion rubles ($211.72 bln), expenses of around 16 trillion rubles ($252.8 bln), deficit - slightly over 3% of GDP," he said.

The prime minister has also pointed out that Russia’s budget for 2017-2019 is based on a conservative macroeconomic outlook.

"The budget has been prepared, it is challenging and highlights the current economic situation. It is also rather tough regarding separate items. The new budget meets the opportunities we have. The budget is based on the conservative scenario of the country’s social and economic development," he said.

"We have taken into account continuing sanctions and response measures in budgetary forecasting for the next 3 years," Medvedev said.

Key interest rate cut and inflation

According to Medvedev, the government expects the Central Bank to further cut its key interest rate next year.

"It is necessary to make credit resources more available. Low and stable interest rates enable entrepreneurs to plan business with more confidence, to plan consumer spending, including purchases of real property, education, treatment. This year the Bank of Russia has already reduced the key rate twice. We assume that the economic situation will allow (the regulator) to continue the policy of encouraging credit activity next year," he said.

The government will continue its policy of maximum control over inflation.

"We will continue our policy of maximum control over inflation. Thus year it fell roughly twice, from almost 15% in December 2015 to 6.9% in August 2016," the official said.

Conditions for business development

The prime minister has also noted that Russian tax policy should create a favorable environment for business development.

"Tax policy should create favorable conditions for business activity. We have already formed a tax incentive system for small businesses and individual entrepreneurs, which includes such mechanisms as territories of advanced development, special investment contract. In the coming years we will continue developing it," Medvedev said.

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