MOSCOW, November 5 (Itar-Tass) - State Duma, the lower house of parliament, has passed in the first reading the federal budget for the years 2014 through to 2016. For the first time in ten years, the authorities said in advance that economic growth was slowing down and there were no special hopes for "a steep climb" or "macroeconomic improvements".
Experts are making recommendations to the government to revise the budget and to raise the state debt. Recommendations to cut the spending have been dropped.
When the Finance Ministry was designing parameters of the budget, it warned about a fiscal gap of one trillion rubles upon the results of 2013. Proposals were made to pull out of the situation by cutting the expenditure for the economy, the social sphere and human resources.
Savings for a rainy day make it possible to get over the depressing tendencies and the Russian Federation has two 'vaults' today - the Reserve Fund and the National Affluence Fund. The crisis of 2008 and 2009 made the Reserve Fund shrink from the initial 4.8 trillion rubles to about 700 billion rubles.
Accumulated in both funds today is the amount of $ 174 billion /5.6 trillion rubles/.
Nonetheless, notwithstanding the availability of monies in both vaults Russia's foreign debt is rising. The Accounting Chamber says it increased by 394.1 billion rubles /6%/ in the period of January through to September 2013 and stood at 6,914 billion rubles /about $ 216 billion rubles or 10.4% of the forecasted volume of the Gross Domestic Product/.
The internal debt grew 2.7% over the same period to reach 5,109.8 billion and the external debt jumped 17% to 1,804.2 billion rubles. International foreign exchange and gold reserves totaled $ 522.6 billion on October 1, 2013 - down $ 15 billion or 2.8%. Accounting Chamber's former chairman Sergei Stepashin says this means that every Russian is already in debt of $ 4,200 even if he or she is a newly-born baby.
On the face of it, many highly industrialized nations have the state debt surpassing the Russia's debt. Germany's debt stands at 65% of the GDP and France's debt is even bigger than that. The incumbent leadership of the Accounting Chamber believes the situation is not at all critical and Russia is able to repay its debts.
Vladimir Averchev, an advisor to the director of the Russian government's Analysis Center, had this to say when Itar-Tass asked him if it was safe for Russia to build up its foreign debt: "To maintain a state debt is totally normal practice these days, and Russia's debt is one of the smallest in the world if you take its percentage of the GDP. From this angle of view, the situation should be absolutely safe /for the Russian authorities/."
Averchev recalled that "the proponents of industrial policies and the adepts of macroeconomic stability are arguing all the time over the reasons, for which Russia is still keeping a part of its monies in the U.S. securities yielding a very low interest of just 0.58% annual. According to Averchev, though, this is a payment for low risks and for the security of safekeeping the monies accumulated at Russia's Reserve Fund.
He believes that the growing external debts of Russian corporations make up the biggest submerged threat to the state budget.
Averchev recalled the situation of 2008 when the Russian banks VTB and VEB had to rescue Oleg Deripaska, the owner of Rusal corporation so as to prevent the outflow of critical assets to the West.
He also believes that the debts accrued by separate Russian regions are a time bomb. "Shortfalls in the collection of taxes and economic stagnation prompt the regional authorities to issue internal bonds and many of Russia's constituent territories have already turned into potential bankrupts.
Averchev also told Itar-Tass that given the current situation with the state debt and even with the state budget, which looks fairly secure and reliable, "problems with the debts of corporations and regions are maturing latently but they may grow over into a malignant tumor some day."