Nechaev: the problem for economic growth is administrative and corruption pressure on business

Former Minister of Economy, Chairman of the Civil Initiative party Andrei Nechaev answered questions from Yana Antonova, coordinator of the Krasnodar branch of the Open Russia public movement, about the situation in the banking sector and the state of the economy in Russia.

Is it possible for large banks to go bankrupt in Kuban, like Tatfondbank in Tatarstan?

I am not familiar enough with the banking system of Kuban, so I hesitate to make forecasts for its development. I can only say that the Central Bank’s general policy of reducing the number of banks in the country remains the same.

In your opinion, will all depositors of bankrupt banks be paid amounts of up to 1.4 million rubles, as provided for by the law on state guarantees for deposits?

Although the Deposit Insurance Agency is experiencing obvious financial difficulties after numerous payments to depositors of banks whose licenses were revoked in recent years, I am convinced that, if necessary, the state will continue to provide it with financial support, and legally guaranteed payments to depositors of bankrupt banks in the amount of up to 1.4 million rubles in case of existing grounds will be provided.

In excess of this amount, deposits will be paid during the liquidation of banks as part of the bankruptcy procedure from the bankruptcy estate, taking into account the order of payments in accordance with the bankruptcy law.

What awaits the Russian economy this year? Will the economic crisis get worse?

In general, there is reason to hope that the “bottom” of the crisis in the Russian economy has passed, although previous similar statements by state leaders did not come true. However, starting from the 4th quarter of last year, key macroeconomic indicators began to improve.

At the same time, I see no reason to expect high rates of economic growth this year, or even in 2018. Nominal GDP growth in 2017 will most likely be associated with the so-called “low base effect,” i.e. with a strong drop in GDP in previous years. Even against the backdrop of a generally positive picture of macroeconomic dynamics, there are also alarming notes in the statistical reports.

Thus, after an increase in real incomes of the population (adjusted for inflation) in January 2017, they fell again in February.

The crisis experienced by the Russian economy is not associated only with sanctions and the fall in world oil prices, but is of a systemic nature. This is a crisis of the development model chosen in the mid-2000s. It is characterized by a course towards nationalization of the economy with a corresponding reduction in competition and a focus primarily on raw material exports.

A serious problem for economic growth is administrative and corruption pressure on business. In practice, it is not decreasing, despite all the assurances of the authorities about strengthening the fight against corruption and limiting the bureaucratic press. Low property security in the country, including due to the lack of independent courts subject only to the law, is the main obstacle to investment.

It is obvious that a way out of the systemic crisis and the transition to sustainable economic growth is impossible without a fundamental change in socio-economic policy and the creation of a favorable business climate in the country. Despite numerous declarations by the authorities to support business, real steps towards the transition to a new development model are not yet visible.

If there is no change in economic policy, we will face a protracted economic “vegetation” with a possible intensification of crisis phenomena in the event of a deterioration in the foreign economic situation or the adoption of more stringent sanctions.

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