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Russia's anti-crisis plan to ease situation but many problems will stay

Some economists believe that the plan lacks systemic measures for handling the problems that have brought about the current economic situation

MOSCOW, January 28. /TASS/. The Russian government’s anti-crisis plan for 2015 may help ease the situation and calm investors, polled domestic economists have been telling TASS. At the same time some of them believe that the plan lacks systemic measures for handling the problems that have brought about the current economic situation.

The implementation of the anti-crisis plan is to proceed along three main tracks: encouragement of economic growth, support for individual industries and measures to maintain social stability. There are seven guidelines for achieving this: support for import substitution and for the export of manufactures, including high-tech items, promotion of small and medium businesses, creation of opportunities for drawing finances into the key sectors of the economy, compensation for additional inflation-related costs for the most vulnerable groups of citizens, steps to ease tensions on the market of labour, optimization of budget spending and efforts to enhance the stability of the banking system.

The government will present to the State Duma a bill on the reduction of most federal budget spending articles by 10%, first and foremost, by slashing ineffective costs. Spending cuts will not affect the social obligations, defence, support for farming, and Russia’s international liabilities.

Earlier, Finance Minister Anton Siluanov said the plan’s implementation by no means envisaged greater budget spending. The funds needed for translating the plan into reality will be taken from the anti-crisis reserve, which currently stands at 170 billion roubles. Also, certain reserves within the existing state programs will be tapped.

According to earlier reports, 1.375 trillion rubles would be required - budget resources, government guarantees and National Welfare Fund money.

The very instance the anti-crisis plan has been drawn up is a great stride forward, even though the document as such is not impeccable, assistant professor at the Russian presidential academy of the national economy and public administration (RANEPA), Vasily Yakimkin, has said. "This eases tensions inside the country and in the investment community," he said.

He welcomed joint efforts by the Ministry of Finance and the Central Bank to work together and to extend loans to small and medium businesses.

At the same time, Yakimkin said, the proposed measures are largely similar to those implemented during the 2008-2009 crisis. "The economic situation is now very different, so copying everything would be wrong," he believes.

"A number of measures that are now referred to as parts of a general anti-crisis plan, were announced and launched earlier," the leading research fellow at the Higher School of Economics’ Center for Development, Andrey Cherenyavsky, said. Last year a decision was made to support the banking system with one trillion roubles of OFZ federal bonds. Keeping budget in balance and supporting banks, the expert said, are the basic parts of the plan in terms of the allocated funds.

"The plan will certainly ease the situation," says the director of research of regional reforms at RANEPA, Alexander Deryugin. "But it is aimed at addressing current, short-term issues, but none of those responsible for the current situation.

True, industries may start getting support, but the poor investment climate and excessive bureaucracy are still there, he added. No institutional reforms that might fundamentally change the situation in the economy are in sight.

Besides, the plan lacks financial evaluation of many aspects, which is bound to push up costs.

The acting chief of the budget policies laboratory at the Gaidar Institute, Arseny Mamedov, agrees that major funds must be allocated for social liabilities. At the same time keeping defence spending intact was a controversial decision, he argues.

"For the time being we are proceeding along the same track we followed in 2009 and 2010. We have been trying to put out the blaze of emerging problems with a shower of cash," he said.

In particular, Mamedov pointed to the need for easing the tax burden on small and medium businesses.


TASS may not share the opinions of its contributors

TASS may not share the opinions of its contributors