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Investment stimulation as key task for Russian economic growth

January 14, 2016, 19:20 UTC+3 Zamyatina Tamara
© Sergey Fadeichev/TASS

MOSCOW, January 14. /TASS/. The international economic forum in Moscow diagnosed the Russian economy with "dependence on oil prices" and offered medical treatment measures to cure this disease by encouraging investment into the real sector, experts polled by TASS said on Thursday.

The Gaidar forum named after former Russian premier and reformer of the domestic economy in the early 1990s Yegor Gaidar was held in Moscow on January 13-15. The forum annually brings together leading world scientists and politicians, bankers and business people to discuss the vectors of economic development.

Russian Prime Minister Dmitry Medvedev stated at the forum that the domestic economy was living through new oil reality rather than through temporary upheavals. According to Medvedev, along with a sharp fall in the price of oil, such factors as the sanctions pressure and global political instability have become almost the strongest challenges for the Russian economy in the past decade.

"If oil prices continue falling, the budget parameters will need to be adjusted. This has to be understood and it is necessary to prepare for the worst-case scenario as is done in other countries," the Russian premier said.

The ministers of the Russian government’s economic bloc discussed budget-saving measures at the forum.

The government intends to cut 2016 budget expenditures by 10%. Finance Minister Anton Siluanov proposed privatizing state companies to yield 1 trillion rubles ($13 billion) over two years. Economic Development Minister Alexei Ulyukayev noted that the strategy of the saving resource for future investment growth was replacing the consumer model of behavior.

Ex-Finance Minister Alexei Kudrin spoke as the government’s main opponent at the forum. He lashed at the government’s current social policy, which was "eating up" a considerable part of the budget, which could be spent on investment in the real sector of the economy.

According to Kudrin, Russia needs economic growth of no less than 5% per year to solve the current problems and fight poverty.

Scientific Head of the Higher School of Economics and ex-Economy Minister Yevgeny Yasin believes that the current discussion at the Gaidar economic forum reflects real problems of the Russian economy.

"The main conclusion from the discussion on the prospects of the Russian economy at the Gaidar forum is the need to state the inevitable continuation of the decline, unless the government starts to implement structural reforms," Yasin told TASS.

"Reforms should be started from the transformation of legal regulation in the economic sphere. A market economy cannot be efficient, if business is not confident in the indisputable supremacy of law. Business people won’t invest in production without a feeling of the guaranteed freedom of entrepreneurship," the expert said.

His view is shared by Chairman of the VTB Bank Supervisory Board, ex-head of Russia’s Central Bank Sergei Dubinin. "Encouraging private investment should be the government’s long-term anti-crisis task," Dubinin told TASS.

In the financier’s opinion, the main idea mentioned at the Gaidar forum is that no matter how paradoxically it may seem but state expenditures shouldn’t be curtailed sharply amid the crisis.

"The main task at the time of exiting the crisis is to maintain economic growth. Government members bound by the government’s decisions agree, even if cautiously, with ex-Finance Minister Alexei Kudrin that in the current conditions there should be no fears about an increase in government borrowings and government debt for economic stimulation," the expert said.

Dubinin drew attention to Kudrin’s proposal to use Russia’s Reserve and National Wealth Funds more actively in the anti-crisis conditions and even unite them for more efficient spending to stimulate the economy.

"Such a decision has not been taken so far. It is understandable that the government, which manages these funds, is seeking to have a reserve stock and keep it for years to come. But no economic growth can be expected, if funds are not invested in the economy," the financier said.

"The 5% annual economic growth is a long-term task for Russia. It is impossible to jump from negative to positive indicators at once. The discussion at the Gaidar forum demonstrates that the Russian government has the understanding of the need to save and change the budget structure while keeping the basic guarantees of social policy. But there is also the understanding of the invariable imperative to attract additional resources to the budget with all possible measures and support economic growth," Dubinin said.

TASS may not share the opinions of its contributors