RUSSIA must set aside billions of dollars in next year’s budget to protect the country‘s vulnerable economy in case of a new economic crisis, President Vladimir Putin ordered yesterday.
Putin, who has in recent months faced unprecedented street protests against his rule, said Russia’s main priority was to ensure economic stability despite its dangerous dependence on energy exports.
“We must take into account any scenarios for the world and Russian economies and have the instruments and possibilities to react,” Agence France Presse (AFP) the president as telling the government and members of parliament in an unusually stark warning of danger.
“Therefore, I ask you to put into the coming year’s budget enough reserves to realise anti-crisis measures, if, of course, the need arises,” he said in comments published on the Kremlin website.
Putin did not give figures but Finance Minister Anton Siluanov said the government would already in 2012 have the right to spend 200 billion rubles ($6 billion) on anti-crisis measures.
Siluanov had told Financial Times earlier this month that Russia was ready to build up a chest of $40 billion in the next years to combat the effects of an economic crisis, as Moscow nervously eyes the eurozone’s turbulence.
Putin admitted that the government’s high-cost programme of improving infrastructure in Russia, modernising social services and reforming the military now needed to be implemented in “complicated conditions”.
“The world economy is going through a period of turbulence and we need to be ready for any crisis,” he told the meeting on Russia’s budget policy to 2015.
“Our main task is to preserve stability of the macroeconomy and the budget. It’s clear that the main risk is the high dependency on the fluctuations on global energy markets.”
The Russian authorities are still haunted by the last financial crisis which saw growth contract 7.9 per cent in 2009 in a sudden end to the stellar growth rates that had marked in the initial part of Putin’s 12 year rule.
Economic Development Minister Andrei Belousov said that in the first quarter this year Russia enjoyed growth of 4.9 percent and growth was seen to be 4.0 percent in the second.
But he added that such rates were nowhere near high enough to realise the government’s target of raising labour productivity one-and-a-half times by 2018 and financing its modernisation campaign.
“For this we need to have growth of five percent and it’s better to approach six percent,” Belousov said.
Russia’s former finance minister Alexei Kudrin, who quit last year after falling out with the Kremlin, warned last weekend that Russia risked seeing growth contract up to four percent in 2013 due to the problems in the eurozone.
The fiscal hawk also said Russia needed to work out scenarios based on a much lower oil price of 60 dollars a barrel which would have a drastic impact on the size of the budget.
Siluanov said that Russia was projecting a budget deficit of 1.5 percent in 2013, slightly better than the previous forecast of 1.6 percent.
Putin also said that Russia needed to include in the budget three years worth of measures helping Russian companies adapt to Moscow’s impending membership of the World Trade Organisation (WTO).
“We need to minimise the possible risks for our business that are linked to joining the WTO,” he said.
The Russian parliament is due next month to finally ratify Russia’s entry into the WTO, ending a tortuous process that has lasted almost 17 years.