Page 28 - Eastern Europe Outlook 2020

government’s fiscal balance will remain in the black: the surplus will stand at 0.8% of GDP in 2020 and 0.2% in 2022. The stringent approach to spending – via continued implementation of the ‘fiscal rule’ – will remain unchanged, allowing the sovereign fund, the NWF, to expand from $167bn in late 2020 to $242bn by YE22.
National projects will account for 9.8% of gross federal expenditures in 2020,​ 10.8% in 2021 and 12.2% in 2022. Moreover, in 2020, the actual amount of funding in this area could top 14.7%, or RUB3 trillion, if the government puts to work all unspent money on these projects carried from 2019. However, additional public funding of the economy from the sovereign fund will remain limited: the Duma approved the government’s proposal to spend no more than Rb585bn a year in the next three years via the Development Fund.
The spending on the national projects is going too slowly​, but Putin said at an investment conference that budget implementation is definitely better than the use of funds allocated for national projects.
Preliminary data shows that only 64% of funds allocated for national projects have been spent, which is an issue that needs to be addressed. The problem is that a very large part of funding allocated for national projects comes from federal sources, while most of the money is to be spent in the Russian regions. This means that since day one, both the government and the regional heads had to better coordinate their efforts. Now, their interaction is improving. Putin said that the goal is not to spend money whatever it takes.
The spending must yield results. The result should be reflected in faster economic growth, higher labour productivity, better quality of labour resources, and ultimately these efforts should have an impact on people’s well-being, leading to growth in their real incomes. The president added that to raise the required amounts for national projects, the government even had to increase the VAT, and it is therefore extremely important for there to be certainty that the money raised for national projects is spent efficiently.
28​ EASTERN EUROPE Outlook 2020​ ​ ​www.intellinews.com