Page 13 - RusRPTFeb21

· The Russian government’s anti-crisis measures clearly differ from those pursued by Western countries and many developing countries, where governments are creating new debts to expand support for the economy. In other words, future generations will pay the price for their country’s quick exit from the current crisis.
This raises the question of who will pay for Russia’s “way out.” Some ​believe that this will be up to the government; that economic conditions will force the authorities to increase the efficiency of budgetary expenditures. On the other hand, many experts ​maintain​ that businesses and part of the population will pay (and are already paying) the price.
Meanwhile, Accounts Chamber Chairman Alexey Kudrin ​suggests​ another possibility: that the regions (alongside enterprises) may be among the main victims of the crisis. While the federal budget can increase borrowing painlessly, the regions have no such possibility. And while at the height of the crisis the federal government provided the regions with extensive assistance (though it was distributed unevenly with many regions receiving much more money than others for some reason), in 2021, judging by the budget law, the regions will have to find the money to get themselves out of the crisis on their own.
According to Kudrin (and a number of other economists), the government could further relax the budget rule and spend much more money to support citizens and the economy in 2021. But instead, the authorities are planning to continue saving for a future economic breakthrough: the National Welfare Fund (whose “surplus” is meant to finance the breakthrough national projects) grew in volume in 2020 — and that’s in spite of the crisis.
Meanwhile, the government is predicting that “good times” will follow the “recovery year” (2021); that the economy will grow more than 3 percent per year for the first time since the early 2010s. This will be achieved primarily with the help of state investment — through the implementation of the national projects that the authorities continue saving for even amid the crisis. Spending on the national projects is expected to grow to 12 percent of all budgetary expenditures in 2023 (9 percent of spending was allocated for these purposes in 2019, but in actual fact much less was spent).
Economists — including Accounts Chamber Chairman Alexey Kudrin — doubt that these goals can be achieved. For many years already Russia has suffered from low ​potential growth;​ much lower than it ought to be for a country with its level of GDP per capita. After the short (and not so strong) recovery growth of 2021, when enterprises will simply startback production put on hold due to the coronavirus epidemic, the problem of low potential growth will only escalate. In 2022–2023, potential growth is unlikely to exceed 1.6 percent, according to the IMF. And in all likelihood, the national projects will not help: the government implementing them will only increase the state’s share in the economy, and competition will decrease. At the same time, Russia will remain in (partially forced, partially voluntary) isolation, which won’t allow for increased competition and cooperation with foreign manufacturers — this will also limit potential growth.
13 ​RUSSIA Country Report​ February 2021 ​ ​www.intellinews.com