Siluanov invites investors

By Vestnik Kavkaza

In early August, Russia has restricted food imports from the countries that have imposed sanctions against it: the United States, members of the European Union, Canada, Australia and Norway. The foods banned for import to the Russian Federation were beef, pork, poultry, sausages, fish, vegetables, fruits, dairy products and others. Speaking at the Investment Forum "Russia Calling!" Finance Minister Anton Siluanov said that the Ministry of Finance reports sharp increase in food prices due to the restrictions imposed on imports.
According to him, "The current year has been difficult in terms of external factors. Perhaps it will remain in history as the year of shocks that we experienced. The behavior of investors was affected by the geopolitical changes and risks."

Falling oil prices, geopolitics, and curtailing of the QE programs cost federal budget 4% of GDP,  Siluanov said. Among the negative factors he identified oil prices: "In the second half of this year, prices have gone down. Russian economy depends on the pricing. Whereas in the first half of the year the price was 105-110 dollars per barrel, now the number is 91. It is very difficult for the Russian economy. But thanks to our restrained fiscal policy, we have established a sufficiently strong balance of payments on current account. We had very conservative approach to fiscal policy. We will survive this year. This is the policy we should continue. If such situation happened with other countries, I do not know how they would react, because there would be problems in the monetary and fiscal policy. We had discussions in the spring of this year: "Let's increase in the GDP in expenditure by one per cent, thus we will stimulate economy." If we implemented that, what would we do now? We would definitely have to use the reserve fund."

Answering the question of how to adapt to the situation, Siluanov said: "We need to continue maintaining all measures to ensure that the balance of payments is strong. To do this, we should not stimulate imports, should not not stimulate rapidly increasing demand, including consumer demand. On the other hand, we should not inflate state demand by increasing public expenditures. I think it is clear to everyone, because otherwise we are creating further problems, destroying  the stable structure that we had."

Explaining how the government has responded to the current situation, Siluanov said: "We have set a budget for 2015-2017 years and allowed most of the decisions to be taken. First, we did not increase taxes. We began to restructure costs. Firstly, we abandoned the plan for expenditure in trillion rubles for three years. We moved part of defense spending at a later date. We refused increased indexing of wages to state employees. This was not easy for us. Nevertheless, this is an important message for the economy, that cost reduction is needed. We should not even follow the plans we have drawn for the growth of public sector wages. The tempo of this growth will not be higher than the rate of inflation. This is absolutely correct." "We have redirected spending, and we invest now in the Moscow transportation, in airports and ports. We started significant projects in the Far East and so on," the Minister of Finance said.