By Vestnik Kavkaza
Priorities in the new economy of Russia should be connected with development of business, the prime minister Dmitry Medvedev stated yesterday. “The new economy should be connected with other spheres of labor, spheres where business talents and courage, an ability to create business projects and even establish industries play a huge role,” Medvedev thinks.
However, the crisis and the budget deficit are a new situation for the capital and the country in general. As for the regions, 2015 could be even easier for them than the two previous years, according to Vladimir Nazarov, the head of the Scientific Research Financial Institute of the Ministry of Finances of Russia.
“The financial crisis, necessary expenditure cuts and the upcoming abnormal deficit are well-known to the regions,” Nazarov states, expressing his view that the worst year for them “has passed already. It depends on the depth of the processes which will be going on in our country; but it is unrealistic to imagine a worse deficit than the deficit of 2013 – 1% of GDP. In the year 2013, the regions had the lowest revenues in the whole of the recent history, since the early 2000s. They also failed to cut expenditures significantly, even though they were not very big. Thus, 2013 was the worst for the financial system of Russian regions. They ran into debt, and it was a result of two factors.
The first one is that the revenues of the regions, which were allocated by the Federation, have been cut off. In general this is a natural process, as the Federation provided them with many transfers within the framework of the anti-crisis program of 2008-2009. And the Federation was shutting down the program slowly and steadily; and it almost canceled it in 2013; that’s why transfers decreased.
The second factor is that the key role in the crisis which faced the regions was played by a dramatic decrease of income tax; as a result, revenues were the lowest for the whole of our history. At the same time, regions have to fulfill the President’s orders. They got the highest deficit.”
The expert thinks that in 2014 the situation “became better in comparison with 2013, and revenues grew, including due to the income tax. We can see a growth of revenues; and the last months cannot change the situation radically. Even though the GDP and other key indices will decrease all over the country, the crisis will thrust Russia forward toward a new level of economy. The dramatic devaluation of the ruble will lead to import substitution even in our economy, which is chained hand and foot. Today we can see that metallurgical enterprises, which seemed to be hopeless, feel well. The same can be said about agriculture – it is turning into a normal competitive industry of the economy from being a black hole.”
