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Russia to reduce expenditures

September 06, 2013, 11:09 UTC+3

The Finance Ministry has to look for additional money due to the lower, than earlier expected, economic growth rates

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Russian Finance Minister Anton Siluanov stated it was necessary to cut expenditures of all the ministries and departments by five percent. However, priority expenditures, including pensions and student grants, will remain as before. There will be no reductions either in the foreign and internal loan programs, the government's Rossiiskaya Gazeta writes.

The Finance Ministry has to look for additional money due to the lower, than earlier expected, economic growth rates, the daily cites expert Andrei Chernyavsky of the Development Centre at the Research University Higher School of Economics as saying. The Economic Development Ministry has lowered the forecast economic growth rate for this year, expecting it will add only 1.8%, as a 3.2% growth was envisaged early this year when the budget was drawn up.

Investment expenditures are likely to be cut. But it will not be a heavy blow. State investments will be supported by the government's plans to implement large-scale projects at the expense of the National Welfare Fund, Chernyavsky notes. From the fund, 450 billion rubles will be used for infrastructure projects. At the same time, spending on human capital - education, health and science - may be cut.

For the sure fulfillment of all the earlier assumed obligations, an average annual growth should exceed the world rates by 50 percent, expert Nikita Maslennikov from the Institute of Contemporary Development told the daily. If the world economic growth is 3.2-3.4% this year, Russia should have 4.5-4.7%, and better five percent, he believes.

Vladimir Putin in fact has agreed to the budget spending cuts. He told this in his interview to the Associated Press and Channel One on Wednesday before the G-20 summit, the Kommersant notes. But there were no corresponding instructions from the Kremlin to the government so far.

Director of the strategic analysis department of the Financial and Accounting Consultants audit company Igor Nikolayev told the Moskovsky Komsomolets "It is payback for last yeas' populism of unprofessional decisions, when we proceeded from the assumption that everything would be good. We assumed high obligations and said that economy would grow. And now, there is no money."

Reduction of expenditures is a heavy, but forced and necessary measure, experts say.

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