Russian Finance Minister Anton Siluanov, speaking at the International Financial Congress in St. Petersburg, has urged increasing the degree of the state participation in the national financial market.
"Even with the reduction of the budget deficit we will need to significantly increase the state participation in the financial market," he noted.
The Finance Minister added that the availability of reserves is compulsory for implementation of budget policy.
"Reserves are spent and we will certainly have these reserves. Without reserves the budget policy cannot be made," TASS cited Siluanov as saying.
The minister also drew attention to the fact that the budget deficit is now the key factor цршср will determine "what will happen next."
He said that the financial system has fair number of instruments, but not enough resources that could use them.
"The main recourse is the banking sector, while other institutions of the financial market (non-state pension funds, insurance companies, etc.), in fact, do not work," Siluanov explained.
The Chairman of the Board of the National Currency Association (NCA), Dmitry Piskulov, speaking with a correspondent of Vestnik Kavkaza, explained that the finance minister proposed, first of all, to stop refusing domestic borrowing through the issuance of Federal Loan Obligations (FLO) or Government Short-Term Commitments (GKO). "In 1998 the government didn't pay its short-term commitments and government bonds haven't been released in the domestic market for many years. Now the state can borrow money in the domestic market more actively, besides, there is a surplus of liquidity in the banking system. The government can withdraw part of the money through government borrowing, by financing budget expenditures through the issuance of these government bonds," he said.
"Siluanov speaks about more active position of the government borrowing's access to capital market. It is well known that Russia has a traditionally low level of public debt to GDP. If in the United States it exceeds 100%, while ours is 15-20% of GDP. Therefore, there are resources, there is a stock, so we can borrow to finance state programs and other costs. Siluanov said that this can be done in the case of a surplus. Now Russia's popularity in the eyes of international investors has increased - there are reports that Russia's position improved in the conditions of worsening expectation for the EU economy," the expert pointed out.
"Therefore, many have begun to invest in Russian bonds. I think the demand from international investors can grow, so Siluanov is talking about the public debt market specifically," Dmitry Piskulov added.
A professor at the department of the stock market and investments at the Higher School of Economics, Alexander Abramov, in turn, noted that to date, approximately 400-500 billion rubles are chronic deficit, which the Finance Ministry should compensate by depositing assets in the financial market. "The Ministry of Finance still finances the budget surplus through the Reserve Fund, respectively, it puts pressure on the dollar, the ruble and so on. Therefore, many offer to increase the degree of the Ministry of Finance's participation in the domestic debt market. It is possible that this indicates that the Ministry of Finance will participate in the government borrowing market more actively, particularly in the domestic market," the expert said.
In addition, he shared his opinion about how the government's participation in the financial market will allow to cope with the budget deficit. According to the economist, it would be better to cope with the budget deficit by some other measures, and none financial instruments can replace the Finance Ministry's prudence in preparing the budget. "As I understand, today there is a concern related to the fact that the current budget deficit in Russia , which is 4.7% of GDP, is too high. Of course, it is necessary to cope with this by cutting costs. As for the liquidity deficit in the funds market, in this case the Central bank and the Ministry of Finance should find out how to compensate it. They have reserves not only due to the refinancing of the banking system, but also due to the development of domestic investors and the pension system," Alexander Abramov concluded.
