Russia's budget for 2016 approved
Russian President Vladimir Putin has approved the law on the federal budget for 2016. Due to the high volatility on the financial and commodity markets, the annual budget has been adopted for one year, instead of three years as it was earlier. The budget for 2016 envisages revenues of 13.738 trillion rubles and expenditure of 16.099 trillion rubles. The budget deficit will amount to 2.36 trillion rubles or 3% of GDP.
It should be noted that the budget was based on a Urals oil price of $50 and inflation which does not exceed 6.4%. GDP in 2016 is forecast at 78.673 trillion rubles. The upper state internal debt limit for January 1st 2017 is set at 8.818 trillion rubles, foreign debt is set at $55.1 billion or €50.1 billion.
Prime Minister Dmitry Medvedev said earlier that "the mandatory conditions are extremely difficult, the budget is very difficult and reflects the current economic situation in the country." According to him, the draft budget should reflect approaches which allow, on the one hand, to solve urgent social and economic problems, and on the other hand, to optimize costs and reduce the number of inefficient costs.
Professor of the Russian Academy of Justice, Anatoly Selyukov, said in an interview with a correspondent of Vestnik Kavkaza that the budget for 2016 is within normal limits, and the presence of a deficit is not a negative thing. "This is a way to deal with the existing problems. Since there is a source to cover the deficit, I do not see big problems," the expert noted.
Speaking about whether the budget deficit will be replenished at the expense of the contingency fund, he said that basically it will be, but other sources, including traditional loans and investment securities will also be used.
Answering the question of how realistic the proposed inflation is, the professor pointed out that it is unrealistic: "So far, unfortunately, the policy pursued by the Central Bank doesn't correspond to the national interests. I believe that inflation will be higher. According to the latest years it will be about 10%. It would be lucky if inflation shifted to a minimum, because it really affects the development of the economy," the scientist believes.
With regard to the transition from a three-year to a one-year plan, the expert said that it is a necessary measure.
The professor of the RANEPA Chair of Economics and Finance of the Public Sector, Lyudmila Pronina, said that the approved deficit is an adequate for the current economic situation. "Now it was not possible to balance the budget with a lower deficit, because all the measures have been taken, both to raise revenue and to reduce costs, that is, the so-called optimization," she explained.
On the contrary, according to the experts, it will be very good if we can keep the deficit within the announced boundaries, because the conditions are constantly changing, and not for the better, which would require changes to the budget.
Pronina recalled that the Ministry of Finance gave a forecast of $ 40-60 per barrel over the next seven years, but now the price of oil reached a high of $ 36.
The economist noted another negative factor - the external sources, which can compensate the budget deficit, are closed for Russia because of the Western sanctions and, presumably, for a long time.
At the same time, according to her, the greatest concern is not so much the federal deficit as the regional and local budgets.
Of course, we can use the Reserve Fund to cover the deficit, but it is on the verge now, taking into account that the main source of replenishment is oil and gas revenues, the expert stressed.