Budget Policy of the Russian Federation for 2017-2019
The government and the Ministry of Finance, after analyzing the experience of previous periods, decided to return to the three-year budget planning, as indicated by the adopted bill “The main directions of the budget policy for 2017 and for the planning period of 2018 and 2019”. But, despite all the advantages of such an approach, it is difficult to predict whether it will be possible to follow the parameters originally incorporated in the project and whether such a policy will be perceived by the private business as a signal that indicates the stabilization of the situation in the national economy and the security of investment.
The budget policy of the Russian Federation for 2017-2019 provides for a deficit of revenues, which will be due to a reduction in demand for Russian exports, a reduction in the cost of oil and a number of other external factors. To cover the deficit, the government plans to fill the budget by mobilizing additional revenues by taking such measures:
- the completion of the so-called "tax maneuver", which would entail a systematic increase in the MET rates for petroleum products, as well as the abolition of export duties.The pilot project will introduce a tax on added income, which in the medium term will help balance the tax burden in the gas and oil industries;
- an increase from 25% to 50% of the minimum dividend rate accrued on shares of state-owned companies, which will allow increasing the amount of revenues in these areas;
- introduction of a unified base for creating a unified administration system of budget revenues. Due to this, it will be possible to reduce the administrative burden and increase budget revenues.
Costs and budget rules
Costs will be formed within the framework of the fiscal policy for 2017-2019 and the rules designed to reduce the sensitivity of the system to price volatility in world oil markets. The budget rules will work in full force in 2020, while the period 2017-2019. recognized by the government as a transition to avoid shock from a sharp reduction in government spending.
In accordance with the proposal of the Ministry of Finance, by 2020, expenses will be formed from three components:
- the base volume of oil and gas revenues, which will be calculated with the base price of oil at $ 40 per barrel;
- the volume of oil and gas revenues, the calculation of which will be made taking into account the medium-term forecast of the Ministry of Economic Development of the Russian Federation;
- debt service costs. For the correction of indicators in the case of a decrease in the forecast volume of the Reserve Fund to the level of 5% of GDP, the maximum amount of use will not exceed 1% of GDP.
Based on this construction, we can conclude that the budget policy for 2017-2019. It is intended not only to solve the problem of monetary regulation, but also to reduce the share of the state’s direct participation in the economy, for which a phased stabilization of the tax burden and large-scale privatization are planned.
Over the past few years, expenditures have grown in three main areas (non-production), which only contributed to “devouring” the budget: social policy (first of all, pension payments), national defense and debt service. The new approach assumes a compression of the volume of expenses with an increase in their efficiency for a more rational use of the funds received.
Prerequisites for a policy change
Depending on the market situation,external factors and growth indicators of the Russian economy, the government and the Ministry of Finance may revise the main directions of the budget policy for 2017-2019, which may be due to such factors:
- for a long time, the budget was filled mainly with raw materials, which restrained or even retarded the process of economic restructuring. The lack of sustainable demand and guaranteed rental incomes only discouraged measures designed to change the structure of the Russian economy. But since 2015, when the volume of redistributed oil rent began to decline, the situation has changed, which can create prerequisites for changing priorities when planning budget expenditures;
- The main goal of the budget policy is to reduce the deficit. But if there were reserves of sovereign funds, such a problem could be ignored, despite the gradual accumulation of negative phenomena (growth of the shadow economy, population aging, irrational spending structure, when most of the revenue is spent on supporting the power bloc and social needs, etc.). Projectedin the short term, the Reserve Fund can completely exhaust its resources, which should also push for a review of the main theses of fiscal policy;
- the problem of balancing the budgets of the constituent entities of the Russian Federation can be transferred to the federal level, where there are no reserves to maintain the stability of the system as a whole. The current policy contributes to the widening of the fiscal gap, which in the long run can lead to serious problems. The developed measures do not solve, but only delay the manifestation of crisis phenomena that accumulate as new tasks appear. This is a direct way to increase the gap between revenues and expenditures, while the state has fewer sources of financing to cover the budget deficit.