Kudrin and Titov to fight for the future of Russian economy

Kudrin and Titov to fight for the future of Russian economy

Two projects on further development of the economy are to be submitted to President Vladimir Putin on May 25th at the upcoming meeting of the Presidium of the Economic Council.

The author of the first of them is the former Finance Minister Aleksey Kudrin. According to him, today Russia has no resources on the way to the economic growth. According to the ex-minister, the maximum is the achievement of 1% of stable GDP growth. At the same time, Aleksey Kudrin insists on the necessity for institutional reforms (judicial and law enforcement systems) in order to reduce the deficit of GDP by 1% and inflation by 4%. According to the former head of the Ministry of Finance, in case of the implementation of these measures in the next year, high economic growth rates may become possible in 3-5 years, RBC reports with reference to ‘Vedomosti’.

The second project is called 'The economic growth' by a business-ombudsman Boris Titov. He and his assistants stand for 'the transition from 'limitation' to ‘stimulation' of monetary and industrial policy that provides affordable long-term credits with low rates meant to stimulate growth in production and investment development. The authors of this program urge to implement "the Russian variant of the moderately loose monetary policy (the policy of 'quantitative easing'), aimed at refinancing of the Central Bank loans to commercial banks and development institutions’’. 

Chief economist of ‘PF Capital’ Evgeny Nadorshin underlined in a conversation with ‘Vestnik Kavkaza’ that the full list of details of both programs is not available yet, but the statements that were made publicly raise a number of questions. In particular, he drew attention to the fact that there had never been such a period in the Russian history when growth was provided only with the help of public financial reforms without active influence of favorable factors, such as external environment.

"This is about growth, which should not be based on additional revenues in the commodity sector. We have never had such reforms in our country. We carried out reforms in the early 2000s, which were developed against the backdrop of an improvement of external environment up to 2008. Starting from the middle of the decade, the contribution from the environment has been outweighing all positive effects from the reforms and led to a rapid dynamic growth,’’ economist said.

The most important moment is to define the goals this long-term strategy will be based on. Both, Titov's and Kudrin’s programs are the result of actions.

The head of the Association of Regional Banks and Chairman of the State Duma Committee on Economic Policy of Russia, Anatoly Aksakov, partially disagreed with Nadorshin, stressing that the state should participate in the modernization of the Russian economy more actively. He also supported a number of proposals by Aleksey Kudrin. 

"He has a sensible proposal, regarding the development of the judicial system to protect the rights and property rights, as well as the position about the necessity to lower inflation in order to allow business to be actively involved in the economic process. But at the same time he underestimates the role of the state in the modernization process, where the state should actively support the largest public-private partnership projects, especially those that can give impetus to our economic development and help to remove infrastructure restrictions for the business development,’’ he explained.