September 16, 2015, 23:37 / Economics

The retirement age may be raised next year

With cheap oil, funds from sovereign funds may run out as early as 2018, admits the Ministry of Finance Margarita Papchenkova Olga Kuvshinova

The Ministry of Finance does not hope to save the budget piggy banks: in 2018, at best, the National Welfare Fund will remain / E. Razumny / Vedomosti

Today, Prime Minister Dmitry Medvedev will hold a meeting with ministers on the budget. The government has already abandoned three-year planning and is preparing a budget only for 2016, but the Ministry of Finance is calculating the possibilities of the budget for three years. The goal is to save at least 2 trillion rubles by the end of 2018. reserves in total in the reserve fund and the national welfare fund (NWF), Finance Minister Anton Siluanov said yesterday: “Despite all the difficulties.”

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We are talking about the funds of the National Welfare Fund, his deputy Maxim Oreshkin clarified: the reserve fund will be exhausted. “The idea is to use the reserve fund to bring costs in line with the real capabilities of the state at a conservative level of oil prices and move to zero use of reserves,” he said. Back in the summer, the Ministry of Finance planned that by the end of 2018, 0.5 trillion rubles would remain in the reserve fund.

In one of the latest versions of budget projections (available from Vedomosti), there are calculations that a little more than 0.5 trillion rubles. will remain in the reserve fund by the beginning of 2017 and funds from the National Welfare Fund will be spent. In 2018, they will also be exhausted. I would really not like to resort to financing the budget deficit with funds from the National Welfare Fund, two Finance Ministry officials say. “If the choice is between depleting funds, including the National Welfare Fund, and emission financing, of course, the first is better,” notes a high-ranking official.

But even this will not solve the shortage problem: at $50/bbl. it is for 2016–2018. will exceed 8 trillion rubles, if expenses are not reduced, follows from the calculations of the Ministry of Finance, including 2.2 trillion in 2018.

At the same time, by the end of 2015, 3.2 trillion rubles will remain in the reserve fund, Oreshkin said (as of September 1 - 4.7 trillion). As of September 1, the National Welfare Fund contains 4.9 trillion rubles, but the Ministry of Finance takes into account that up to 60% of its funds can be used to finance infrastructure. About a quarter of the funds have already been used (deposits with VEB, purchase of Ukrainian Eurobonds, 11 investment projects).

As savings measures, the Ministry of Finance proposes increasing the retirement age starting in 2016. Savings from this range from 620 billion to 1.3 trillion rubles. for three years, depending on the rate of increase: 6 months or 1 year per year, up to 65 years for men and women.

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“The Ministry of Finance’s proposal to raise the retirement age from 2016 is not just a wish of the Ministry of Finance, it was seriously discussed at meetings and was supported by many officials,” says a senior federal official. Other proposals include indexing pensions by only 4% in 2016–2018. (until now the Ministry of Finance insisted on 4.5%), refusal to pay pensions to working pensioners with an annual income of 500,000 rubles. (an option of 1 million rubles is currently being considered), reducing the indexation of salaries of public sector employees and military personnel (in 2016 - to zero).

Due to lower oil prices, there was a shortfall in revenue for 2016–2017. – 2.2 trillion rubles, follows from the calculations of the Ministry of Finance, the deficit is 2.9 trillion and 3 trillion rubles. accordingly: this is already taking into account the partial reduction in expenses provided for by the Main Directions of Budget Policy (BDP), against those laid down in the “pre-crisis” budget law for 2015–2017. The transition to a one-year budget was probably due to the fact that now the government has no idea how to cut expenses or where to get money, believes Alexandra Suslina from the Economic Expert Group. Refusal of the three-year budget will lead to the zeroing of the budget cycle, she says: no law - no promises, nothing to sequester, the 2018 budget will be formed from scratch. And with regard to the one-year budget, which is not yet very easy to cut, the prospect of quickly zeroing out reserves provides another opportunity to bargain - what to cut and how much, she argues.

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At recent government meetings, the Ministry of Finance proposed reducing 2016 expenses by another 700 billion rubles. (in addition to the already reduced by 400 billion), says a senior official. Mainly due to state defense orders and social spending, approximately 250 billion rubles each, the rest - a little for each item. But there are no final budget plans yet, so this amount may change, the official notes.

Another alternative is to increase the national debt; all departments agree to this compromise, say two senior officials and two officials from the Ministry of Finance and the Ministry of Economic Development.

It is possible to do without cutting expenses at all, Minister of Economic Development Alexey Ulyukaev told Vedomosti: it is necessary to increase the public debt. According to his estimates, in 2016 it is quite possible to increase loans by 1 trillion rubles. – that is, almost twice as much as the 1.1 trillion rubles provided for by the National Economic Safety Program. They adjusted the parameters of the 2015–2017 budget approved by law, including increasing the previous borrowing plan for 2016 by more than a third and by a little less than a third for 2017.

“There are debates about this now, we’ll see how they end,” Deputy Finance Minister Sergei Storchak answered a question about the possibility of increasing the public debt, recalling that until now the Ministry of Finance has adhered to a conservative borrowing policy.

Banks have already promised that they are ready to buy an additional OFZ of about 1 trillion rubles, says a high-ranking official: corporate lending has decreased, banks have a lot of liquidity. The crowding out of private borrowers, of course, will also lead to a general increase in borrowing rates in the economy, so an increase in public debt is possible only if contributions to the funded part are maintained, the Ministry of Finance official emphasizes.

The displacement of private borrowers by the state will further worsen the state of the economy; the growth of public debt is not a solution to the problem, it is postponing it for the future, Suslina points out. But you have to choose between bad and very bad: raising taxes would be even worse, she argues.