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Putin presents message on budget policy in 2014-2016

June 14, 2013, 13:04 UTC+3
One of the main tasks for the government and Federal Assembly is to create conditions for owners of large funds to find it advantageous to invest in Russia
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President Vladimir Putin presented a message on budget policy in 2014-2016 to the government. In his view, the main thing is to support economic growth by fulfilling strategic tasks outlined on May 7, 2012. Also, the previous requirement to make the country's budget deficit-free by 2015 is no longer on the agenda. Experts believe it is nearly impossible.

Vladimir Putin talked about stimuli for business activity, attracting investments and ensuring a balanced budget, the Novye Izvestia reports. To fulfill these targets, a decision was made to complete the development of budget strategy in the period until 2030 in the next few months. It will spell out possible actions by the government under any economic scenario, including unfavorable one.

One of the main tasks for the government and Federal Assembly is to create conditions for owners of large funds to find it advantageous to invest in Russia rather than "hide them on islands" or spend on luxury items, the president said.

Due to a large number of state programs, the timeframes of their implementation should be revised. "If there is no enough money, we have to determine priorities," Putin said.

The opportunities for constant increase in budget expenditure without economic growth are exhausted, the RBK Daily writes, Russia has to increase effectiveness of the allocated funds, and in order to finance large investment projects it will have to tap the National Welfare Fund.

Thus, experts heard the key ideas of Vladimir Putin's latest budget message which will become part of the state-of-the-nation address to the Federal Assembly starting next year.

Vladimir Putin indicated what he was expecting form the government in the next there years. "The main requirement for budget policy is maintaining economic growth," he stated. Increasing the effectiveness of expenditure is the main resource. The process has been slow so far. The system should be so stable that even in case of downfall of oil prices, the government will not suspend the meeting of social commitments. Further increase in social expenditure is only possible with simultaneous growth of the GDP, otherwise "we'll be deadlocked. But the spending which yields the largest effect for economic growth should be increased," the head of state noted.

The message was a clear turnabout from "the extensive concept of budget policy to intensive," the newspaper cited head of the economic expert group Yevsei Gurvich as saying. Another important novelty is the orientation toward goal-oriented social expenditure and its distribution according to "requirement criteria."

Many ideas brought forward in the message have been voiced before, but now they "transfer to the practical plane," Gurvich went on to say, for example it concerns programs in the budget. "The objectives are not backed by resources," the president said in critical remarks, "certain programs have several versions; as a result, they have different funding. If there is not enough money, we have to determine priorities. Analyze again." Vladimir Putin urged officials to identify reserves and redistribute them to strategic tasks.

Putting out the fire with liquid assets as in 2008 is not possible now, senior researcher at the Russian Academy of National Economic and Public Administration /RANKhiGS/ under the president Natalia Tishchenko said: "The injection of money in the economy or certain branches, such as car-making will not be as effective as at that time."

A year ago, Putin demanded that the country's budget be deficit-free by 2015, the Nezavisimaya Gazeta reminds. Yesterday, no mention was made about this target. Meanwhile, at a meeting of Finance Ministry officials in April 2012, Putin called for "ultimately attaining a deficit-free budget by 2015. Even a small deficit is a risk for Russia, given our dependence on the world situation."

Presently, Russia is actually becoming a regular borrower. Director of the institute for strategic analysis Igor Nikolayev says it is far from being accidental. "It is impossible to achieve a deficit-free budget in a foreseeable future," the expert said, "even the authorities recognize it, but they try not to emphasize it."

 

Relations between the Dniester Moldova Republic and Chisinau worsen

 

The confrontation on the Dniester is fraught with escalation to a new war, ahead of the next anniversary of the armed conflict in the region, the Kommersant claims. The authorities of the Dniester Moldova Republic adopted a law on state border which envisions control over several settlements under Chisinau jurisdiction. The newspaper sources in the Moldovan government saw "elements of possible use of weapons" in the law. Experts and western diplomats in Chisinau see "the hand of Moscow" in the Dniester region's actions which seeks to prevent the rapprochement between Moldova and the European Union, as it once prevented Georgia-NATO rapprochement.

Under the new law, until the recognition of sovereignty and independence of the PMR, the republic's authorities unilaterally "take measures to protect their sovereignty on the state border." It is unclear what measures will be taken and how the Dniester region will take five settlements under control.

The Moldovan authorities' reaction was furious. The government said the PMR law "contradicts the legal norms and the logic of conflict settlements," while Tiraspol's actions are "unilateral, openly ignoring the principles and mechanisms of the security zone."

Chisinau's violent reaction is explained by the fact that there occurred a series of incidents in the zone of direct contact of interests of Moldovan and Dniester region law-enforcement bodies, which narrowly avoided bloodshed, the newspaper underlined.

Tiraspol is surprised at Chisinau's nervous reaction. "The law does not affect the situation of Moldovan citizens, nor does it change the PMR border crossing rules," PMR Foreign Minister Nina Shtanski explained to the Kommersant. "It fixes the current situation and dubs provisions of the Constitution. It is no secret that certain PMR territories are under Moldovan jurisdiction."

Experts see a bad trend in the Dniester region situation. "The law has to be enforced. Varnica is now part of the PMR, and if someone objects, force should be used," muses former PMR Foreign Minister Valery Litskai, "it dramatically mounts tensions. Everything is in suspense before an attempt to do something, because if you announce a law and do not enforce it, you discredit yourself."

Chisinau sees the reasons behind tensions in the upcoming summit of Eastern Partnership in Vilnius in November, where Moldova and the EU will announce completion of the talks over visa-free travel and initial the association agreement. "The puppet Dniester region is resolving Russian geopolitical tasks. It was conceived as a mechanism to keep Moldova - from unification from Rumania at first, and now from rapprochement with the European Union. The rivalry between Moscow and Brussels in the region is assuming a definite outline," well-known political analyst Nikolae Kirtoake said, "we see the establishment of a bridgehead to put tough pressure on Moldova.

Western diplomats in Chisinau share this view. It al begins to look like events in Georgia in 2008, a diplomat who participates in the Dniester settlement talks told the newspaper. You should not forget that in Vilnius, agreements will be signed not only with Moldova but also with Ukraine which handles the Dniester region issue as OSCE president. The destabilization of the Dniester region situation will hurt both Chisinau and Kiev.

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