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Eastern Europe
June 8, 2018 www.intellinews.com I Page 18
Shuvalov replaces current VEB head and ex- Sberbank banker Sergei Gorkov. Shuvalov already announced that he will be laying off half of VEB's staff and moving the development and investment bank's headquarters closer to the Kremlin.
On paper the government has already come up with ways to finance Putin's latest May Decrees through the creation of an infrastructure spending fund, a long-postponed hike of the retirement age, oil and gas tax reform, and possibly a VAT increase. But how efficiently the funds will be spent remains the make or break of the plan.
In an interview with Gazeta.ru chief economist of VEB Andrei Klepach on June 4 argued that primary domestic reserves that could be tapped for pushing Russia's GDP growth above the structural ceiling of 1.5-2% growth include channelling private savings to investment and stepping up state spending.
While the former requires further decline of the interest rates, the efficient and clean transmis- sion channels for both private and state invest- ment are key factors for success, Klepach noted.
In 2017 the Audit Chamber has flagged more than 6,500 federal spending failures worth a total
RUB1.9 trillion, which was mostly attributed to loopholes in legislation, low competency, and lack of accountability in state institutions and spending hubs.
Indeed, curbing corruption was the main goal
of Kudrin’s appointment in his new capacity at the Audit Chamber, along with tying Russia's strategic development goals to the actual budget, enhancing the methods of budgetary control, and informing the public on realisation of national strategic goals.
"The question is not, whether we spend the money in accordance with the procedures, but whether the spending is getting us closer to the national strategic goals," Kudrin said.
Putin’s inauguration speech unveiled a very ambi- tious reform plan during his state of the nation speech on March 1. The president wants produc- tivity growth to accelerate to 5% per year (since 2009, the average growth was only 1%) during next decade, the share of SMEs in GDP to go up to 40% (from the current level of 20%), the number of people employed in SMEs to go up from 19mn to 25mn people, and to halve the number of peo- ple living below the poverty line (currently 13.8% of the population or 20mn people).