Siluanov: Russia to face difficult years

Siluanov: Russia to face difficult years

Russia will face difficult times in 2018 and 2019, the head of the Russian Ministry of Finance Anton Siluanov said on the sidelines of at the St. Petersburg International Economic Forum.

"We will have to go through difficult times 2018-2019, and since 2020 we will be able to increase spending just over half a trillion rubles a year," the minister explained, adding that only then it will be possible to increase spending without consequences for budget sustainability.

In addition, he expressed the opinion that in 2018 the average oil price will be up to $40 per barrel. At the same time, Siluanov noted that the Ministry of Finance has already started work on the draft budget for the next three-year period, RIA Novosti reports.

An associate professor of Stock Markets and Financial Engineering of RANEPA, Vasiliy Yakimkin, speaking with a correspondent of Vestnik Kavkaza, said that this forecast is based on the fact that tax revenues will be significantly limited in the coming years, and oil prices will remain low. "The industrial production continues to decline a little. The economy is not going through the best period in general," the expert explained.

He also recalled that there will be major legislative changes after 2018. "This is the pension reform, and some tax articles change, and so on," the economist explained.

In his view, another factor that influenced this forecast is that GDP and economy as a whole will probably start to grow in 2019. "By this time we will have to adapt to Western sanctions, and establish cooperation with our Asian partners," the associate professor of Stock Markets and Financial Engineering of RANEPA said.

"There will be much more certainty with oil prices, because the US producers of shale oil will reach the peak of extraction, their technology will become more expensive," Vasily Yakimkin concluded.

The director of the Institute of International Economics at the Russian Academy of Sciences, Ruslan Grinberg, in turn, expressed doubt about the expediency of striving for balancing the budget during the period of stagnation. 

"We need to develop our economy and not be afraid of increasing the budget deficit, the public debt, which is only 15% of GDP. It should be 60% in the EU, but many violate it. So this is a 100% counterproductive approach to both inflation and economic growth," Ruslan Grinberg believes.