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Russia’s state debt will increase by 2021 to 16.6% of GDP

Госдолг России вырастет к 2021 году до 16,6% ВВП

To Finance national projects, the government will have to substantially increase the national debt. In 2019-2021 years Russia will take on the implementation of the new decree may RUB 1.7 trillion, causing the national debt will exceed 16% of GDP. The projects themselves have not yet been approved.

Federal spending in 2019 can make 17.9 trillion rubles, having increased in value from last year’s plans for the 1.5 trillion rubles This follows from the basic directions budgetary, tax and customs-tariff policy (EBTP), directed by the Ministry of Finance on Friday, July 6, in the government.

Costs for 2020 proposed at 18.9 trillion rubles., and in 2021 — 19.9 billion rubles.

Budget revenues next year by the Ministry of Finance is estimated at $ 19,6 trillion Revenues in 2020 are estimated to be $ 20 trillion and 2021 is 20.5 trillion.

The main change in fiscal policy that the Ministry of Finance finally brought together in one budget different plans for the accumulation of reserves and reduction of the non-oil deficit.

Thanks to the new fiscal rule, which is already operating in 2018, in the next three years the Fund will be transferred to the regime only accumulation of oil and gas revenues. But the cost of the investment is proposed to borrow on the domestic market, increasing the size of the national debt.

The amount of debt according to the plan of the Ministry of Finance will increase from 14% of GDP in 2018 to 15% in 2019 In 2020 it will grow to 16% in 2021-m to 16.6%.

The size of the national debt is recognized as “economically secure”.

To implement this design, first of all, it is suggested to completely withdraw from financing the budget deficit at the expense of the national welfare Fund. Resources of the Fund “will be used solely for the purpose of co-financing voluntary pension savings of Russian citizens”, – stated in the documents of the Ministry of Finance.

Note that now there is only one state program of co-financing of pension savings, in which it was possible to enter before 31 December 2014. According to the plans of the Ministry of Finance thus the costs of the NWF are reduced from 1.1 trillion in 2018 to 4.5 billion rubles in 2019, RUB 3.8 bn in 2020 and 3.4 billion rubles in 2021.

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A new budget development Fund formed of revenues, but only on borrowed funds. “This will lead to the structural budget deficit at the primary level in the amount of about 0.5% of GDP per year”, — stated in the materials of the Ministry of Finance.

Real money the maximum amount of Fund in development in 2019 could reach 530 billion rubles next year on the needs of the new Fund may be occupied by more 556,3% 597,4 billion rubles in 2020. But this design allows the Finance Ministry to replenish the actual size of the development Fund, depending on the willingness and reasonableness of infrastructure projects, the main criterion for which is compliance with the requirements of the may presidential decree (No. 204) “On the national goals and strategic objectives of development”.

Hoarding NWF while simultaneously borrowing development Fund Ministry of Finance explains the “Golden rule” according to which “the deficit of the budget goes to the creation of new assets, capital investments, the creation and stimulation of the economy, not on current consumption”.

Note that in parallel, the Ministry of economic development has conducted work on the optimization of traditional investment expenditures from the Federal budget.

In may this year, the Ministry of economic development refused to departments in projects worth 396,8 billion by 2019, according to the Federal target programs (FTP) and Federal targeted investment programme (FTIP). For 2020 the number of rejected projects increased to 555,4 billion.

By the decision of the Ministry of economic development spending on Federal targeted programmes and the Federal targeted investment programme collapsed with 737,3 bn in 2019 to 468,5 bn in 2021. This “shrinking” of the Federal targeted programmes and the Federal targeted investment programme is comparable with the rate of increase of the development Fund which will be managed by the other rules.

The Ministry of Finance has determined the total cost of activities the presidential decree “On the national goals and strategic objectives of development”.

Given the development Fund and the national projects in 2019 and in 2020 it is planned to spend for this purpose 1.2 trillion rubles. annually. In 2021, these costs are already estimated at 1.5 trillion rubles.

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However, the national projects, the government yet. They will be ready no earlier than October 1, 2018. So while you can only talk about the extreme limits, not to specific items of expenditure.

Other budget expenditures are considered “basic” (they are embedded in the current budget for the 2018-2020) and the scope of maneuver for their increase is small. They are mainly indexed to the level of changing inflation rates.

However, in conditions of uncertainty with the projects, the Ministry of Finance in the guidelines have made an important reservation to regional authorities: in contrast to the may decrees of 2012, a new decree of the President “does not increase the unfunded mandates of regions”.

For regional budgets planned reduction in the overall deficit of 97 billion rubles in 2019 to 36 bn in 2021.

This indicates that the sources of financing of deficiency of budgets of the constituent entities will become “securities and loans from credit institutions”.

But as this will be extinguished the region’s debt, which, according to the audit chamber on January 1, 2018, amounted to 2.3 trillion rubles, the Finance Ministry is not explained.

No new tax shocks, in addition to the actual decisions taken the Ministry of Finance promises.

The main directions taken into account the increase in VAT from 18% to 20%, accelerated VAT refunds to exporters, fixation of premiums at 30% and ending in 2021 oil and gas tax reform. For business more important can be details.

The main directions of promise for the next three years continued to improve the administration of revenues of the budget system, “including through the further digitization of tax administration and integration of all information sources and data streams into a single information space”, according to the materials of the Ministry of Finance.

Special attention will be paid to the “collecting more payroll taxes and the establishment of a unified information environment of tax and customs authorities, including through a single mechanism of control.”

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