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Russian authorities’ economic plans fall short of reality

September 26, 2013, 11:16 UTC+3

Russia this year will have an economic development rate lower than the world's average for the first time

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The macroeconomic situation in Russia causes concern, the Nezavisimaya Gazeta notes. "We had no such unfavorable situation in the past five years after the global crisis," Economic Development Minister Alexei Ulyukayev noted last week.

The worsening economic situation was unexpected for officials. At least recently, they hoped for quite other prospects. The difference from reality is particularly noticed in the comparison between the government's recent plans and its latest forced decisions.

Quite recently authorities hoped to overcome the crisis consequences and the budget deficit. In April 2012, a month before his new presidential term, Vladimir Putin demanded from the government to ensure that the country would have a non-deficit budget by 2015. At present, the task is not remembered. The government before September 30 will submit a draft three-year budget to the State Duma, which makes it clear that Russia will not see a deficit-free budget at least in the next three years. In 2015, the deficit is expected to account for one percent of the GDP. The figure is not catastrophic, but the difference from the recent plans is clear.

Authorities expected Russia's economy to grow almost 4% in 2013. It is not a record rate, but higher than in European countries and more than the world's average. Early this year Premier Dmitry Medvedev said the government's task was a five-percent economic growth. It is clear now that Russia this year will have an economic development rate lower than the world's average for the first time. "Regrettably, we see no possibility to reach the world's average level even in 2014," Ulyukayev warns. The Russian GDP in 2013 will grow 1.8-2% at best.

Another example of the gap between the promises and reality is the area of monopoly tariffs. Almost every year, officials pledge to bring the growth of utilities tariffs under control, and almost every year, regions are faced with sharp increase of the prices. There has been real tariff confusion this year. The Economic Development Ministry at first declared that the tariffs of natural monopolies would be frozen for the population and industry in 2014, but a few days later, the government explained that it was "technologically impossible" to stop the tariffs from growing.

Support for small and medium businesses is also one of the declared priorities for the state. But from January 1, 2013, insurance fees for individual entrepreneurs were increased more than twice. The decision of the authorities resulted in mass self-liquidation of businesses. Up to 400,000 entrepreneurs liquidated their legal businesses.

The hard economic situation confronts officials with an uneasy reputation choice - whether to give up some promises or continue to set new tasks and objectives that will become unreal soon. 

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