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The Russian Economy Seeking Ways to Boost Growth
6 June 2019
09:00—10:15
KEY CONCLUSIONS
Russian economy’s dependency on oil prices is going down

Russia needed the oil prices to be at USD 110 per barrel in 2014. After the past 5 years the price settled around USD 40 per barrel. What other country can go through a transformation like that in such a short time? — Maxim Oreshkin, Minister of Economic Development of the Russian Federation.

Growth should not come from oil, it should come from other sectors. Last year processing industry showed +7% of investment, there should be room to grow. Agriculture showed +5%, there should be room to grow. I am talking about service industry, new technologies — Maxim Oreshkin, Minister of Economic Development of the Russian Federation.

Macroeconomic stability is an important economic growth factor

Russia managed to survive the crisis period and create an image of a stable economy. There are healthy elements that help attract investment: federal budget surplus <…> highly disciplined implementation of budget policy and monetary policy. <…> Conservative policy that is aiming towards stability is a serious advantage compared to other growing countries — Stephanie Flanders, Senior Executive Editor for Economics, Bloomberg; Head, Bloomberg Economics.

Russia is keen on making environmental policy part of its economy

Russia is more active in reducing CO2 emissions than most other countries in the world. <…> Russia will play its role so that the economic growth is as environmentally friendly as possible — Maxim Oreshkin, Minister of Economic Development of the Russian Federation.

Business needs help in raising its environmental standards. As a regulator, the Bank of Russia is working to make green financing tools are more accessible — Elvira Nabiullina, Governor of the Bank of Russia.

ISSUES
Economic growth remains slow

Indeed, it is a low rate: 0.5% in the first quarter — Anton Siluanov, First Deputy Prime Minister of the Russian Federation - Minister of Finance of the Russian Federation.

In the coming years or growth potential is 2% tops or even less <…> because we do not enforce structural change and do not strengthen our institutions — Alexey Kudrin, Chairman, Accounts Chamber of the Russian Federation .

Weak institutions and lacking rule of law

Over 55% of our business people do not trust our judicial system, while 2/3 believe it be biased and lacking independence. <…> We have weak institutions and rule of law cannot be achieved. When it comes to law enforcement <…> 70% are confident doing business is not safe. <…> Michael Calvey situation is yet another proof — Alexey Kudrin, Chairman, Accounts Chamber of the Russian Federation .

State regulation efficiency needs to be improved. Currently, Russia is more so towards the bottom of the list in terms of management efficiency, rule of law, and corruption control — Stephanie Flanders, Senior Executive Editor for Economics, Bloomberg; Head, Bloomberg Economics.

High rate of consumer credit growth

If we look at the overall credit structure today, we will see that consumer credit is in the lead. <…> I believe that it is the consumer credit problems that are most likely to lead us to the next recession — Maxim Oreshkin, Minister of Economic Development of the Russian Federation.

People do not take out credit to live large, it is not the demand that is growing. <…> It is the way to maintain a lifestyle when your income is growing slowly — Elvira Nabiullina, Governor of the Bank of Russia.

SOLUTIONS
Structural reforms

We need to instigate structural changes. We are promoting national projects that are hitting problems where it matters the most: labor efficiency, infrastructure, export incentives, small and medium-sized enterprises. <…> I am confident that will boost economic growth — Anton Siluanov, First Deputy Prime Minister of the Russian Federation - Minister of Finance of the Russian Federation.

We have a slow growth problem <…> which can only be fixed through structural reforms — Elvira Nabiullina, Governor of the Bank of Russia.

Assuring entrepreneurs’ rights and property

Many entrepreneurs today talk about the need to protect entrepreneurs’ rights and property. We need to work with that. <…> We need to find the ways to protect entrepreneurs — Anton Siluanov, First Deputy Prime Minister of the Russian Federation - Minister of Finance of the Russian Federation.

Conservative fiscal policy

Softening fiscal policies when limitation lies in a different sphere is not going to instigate economic growth but will create inflation and financial instability risks instead. Stable low inflation is one of the factors leading to investment type of growth — Elvira Nabiullina, Governor of the Bank of Russia.

We should be very careful when it comes to the reserves. They saved us the last time and we need to accumulate more to assure our security. <…> Second: spending the reserves means the weakening of budget rule — Anton Siluanov, First Deputy Prime Minister of the Russian Federation - Minister of Finance of the Russian Federation.

Investment stimulation

The legislature to protect and stimulate capital investment is ready. It will provide stable conditions throughout the entire investment project. <…> We started to push a policy to make the credit cheaper and to subsidize interest rates — Anton Siluanov, First Deputy Prime Minister of the Russian Federation - Minister of Finance of the Russian Federation.

Developing education

Last but not least are the investments into education and technologies. We are investing slightly over 3% of GDP. Innovative countries, such as Sweden or Germany invest 5% to 7%,” — Alexey Kudrin, Chairman, Accounts Chamber of the Russian Federation .

The material was prepared by the Russian news agency TASS