Translated material
"Turn on your head and everything will be fine"
Economic growth has been declared the government's main goal
The Russian government has decided on the main priority in the field of economic policy for the next three years. The key task is to support high growth rates. “This becomes a key task. Everything else is derivative,” said the head of the Ministry of Economic Development, German Gref, last Friday at a meeting of the Cabinet of Ministers (it was held a day later than usual, in connection with Mikhail Fradkov’s trip to Japan and Vladivostok). The minister presented the cabinet members with scenario conditions and the main parameters of the socio-economic development forecast for 2008 and for the period until 2010 - a document without which the development of the federal budget is impossible. Starting next year, the budget will be drawn up for the first time for a three-year period.Mikhail Fradkov expressed solidarity with the minister, noting that no one has yet canceled the task of doubling GDP . True, by 2010, as Vladimir Putin hoped when he came up with this initiative in 2002, the doubling will not happen in any case . However, as a guide, of course, the presidential idea is a good irritant for government officials.
According to German Gref’s calculations, Russia can only achieve sustainable annual GDP growth of 7% by 2012-2013, “which should ensure a doubling of GDP in the long term over a decade.” For now, the forecast for GDP growth is much more modest. According to the main scenario of the Ministry of Economic Development and Trade, GDP growth will be 5.9% in 2008 and 2009, and 6.1% in 2010. Acceleration is expected in many important sectors of the economy (in mechanical engineering, for example, growth will be 6-7% over three years). It would be nice if this growth finally leads to a reduction in the difference in income between the richest and poorest Russians. In the meantime, German Gref admitted, the gap is only growing. If in 2005 the incomes of the richest 10% of the population exceeded the incomes of the poorest 10% by 14.9 times, then in the past it was already 15.3 times.
Sufficiently high economic growth rates for Russia will need to be achieved in an unusual situation for the current authorities of a reduction in prices for the main Russian export product - oil. According to most experts, the price of “black gold” will fall from 55 dollars per barrel in 2007 to 50. Some believe that the price drop will be large - up to 40-45 dollars per barrel.
It is clear that in such conditions the Russian economy can grow exclusively due to non-resource sectors. In other words, diversification of the economy, giving it an innovative character, and modernization of production capacities are as necessary as air. “Today there is no way other than diversifying the economy, reconstructing and supporting the real sector, and increasing labor productivity. This is the main task. Nobody sets the goal of doubling GDP at the expense of oil prices. This is an illusion,” said Mr. Fradkov.
Finance Minister Alexei Kudrin has repeatedly emphasized that the progressive development of the economy is hampered by high inflation. In the coming years, according to government plans, it is expected to further decrease: in 2008 - to 6-7%, in 2009 - to 5.5-6.5%, in 2010 - to 5 --6%. As members of the Cabinet of Ministers admit, in the conditions of gradual liberalization of gas prices, which will lead to an increase in the cost of electricity, it is difficult to achieve such indicators, but it is possible. Suffice it to say that in 2008 gas tariffs will increase by 25%, in 2009 and 2010 - by 27%. In 2010, gas on the domestic market will cost about $100 per thousand cubic meters, said German Gref. In turn, the growth schedule for electricity tariffs so far is as follows: in 2008 - by 12%, in 2009 - by 12.8%, in 2010 - by 13.5%.
During his speech at a government meeting, German Gref criticized Gazprom, which has not yet prepared a final gas production forecast for the next three years, which negatively affects the quality of the country's development forecast - the basis for the formation of a three-year budget. “This is by far the biggest challenge we have for our forecasting. I can’t upset the energy balance when the numbers are different,” the minister complained. The explanation was given by First Deputy Prime Minister, head of the board of directors of Gazprom Dmitry Medvedev. According to him, the monopoly proceeds from the fact that it is first necessary to decide on long-term contracts, assess the real situation on the gas market, and only then make a specific forecast of gas production. Having entered the discussion, Mikhail Fradkov called for “not to dramatize the situation” and to raise the issue “to a higher level.” Although only the president is higher. “There should be one number,” the prime minister said bluntly. However, he immediately advised Mr. Gref to continue working on the forecast (according to the government’s decision, the revised version should be ready by March 11). “The eyes are afraid, but the hands do. Turn on your head and everything will be fine,” Mikhail Fradkov, as always, figuratively concluded the discussion on the gas topic.
On the evening of the same day, the head of Gazprom, Alexey Miller, said that his company would clarify the gas production forecast after concluding long-term contracts with Russian commercial consumers. This will happen before the end of 2007. “Gazprom’s motto is that gas will not be produced until it is sold,” said Mr. Miller and suggested that Mr. Gref use in his calculations the forecast balance of gas production until 2020, which is today the basis for planning production activities the gas monopoly itself.
Last Friday, the government also discussed the draft main directions of Russia's tax policy for 2008-2010 . As Mikhail Fradkov said, the Cabinet of Ministers intends to continue the policy of reducing the tax burden. Alexey Kudrin clarified that reducing the tax burden is possible only by ensuring a balanced budget and public spending policy. Meanwhile, the balance of the budget is under threat. For a number of reasons, including falling oil prices, this year the federal budget will be missing 400 billion rubles. revenues from VAT, the head of the Central Bank Sergei Ignatiev expressed concern. And Mr. Kudrin said that due to the loss of budget revenues due to the clarification of customs tariff rates upon accession to the WTO, the budget will lose 40 billion rubles in 2008, and by 2010 this amount increases to 110 billion rubles.
As part of the discussion of tax policy, First Deputy Prime Minister Dmitry Medvedev asked about the possibility of replacing VAT with a sales tax. Deputy Finance Minister Sergei Shatalov responded that the country is not ready for such a replacement. “All the risks of introducing a sales tax are significantly greater than the risks of VAT,” he said. “Moreover, the introduction of a sales tax at a low rate can significantly reduce budget revenues. I think that we are not ready for this yet,” noted Mr. Shatalov. Also, the Ministry of Finance does not propose to change the flat income tax scale in the medium term. Issues of differentiation of taxation from the point of view of its fairness need to be resolved in other ways, through indirect taxes, Mr. Shatalov believes. In particular, he proposed solving this issue by changing the property tax and levying it depending on the market value of the property, and not on the basis of the value according to the BTI, as now.