Agenda: draft federal budget, socioeconomic development forecast, draft of the guidelines for the single state monetary policy, draft budgets for state extra-budgetary funds in 2025 and the 2026-2027 planning period.
Mikhail Mishustin’s opening remarks
Anton Siluanov’s report on the three-year draft federal budget
Excerpts from the transcript:
Mikhail Mishustin: Good afternoon, colleagues.
Government meeting
Government meeting
Maxim Reshetnikov at a Government meeting
Anton Siluanov at a Government meeting
Government meeting
The Government is about to complete its effort to draft the budget for the next three years. Today, we will review the corresponding draft law and the documents we will be submitting to the State Duma with it. These include the socioeconomic development forecast, the Guidelines for Budget, Tax, Customs and Tariff Policy, as well as the budgets of two extra-budgetary funds, and also several other instruments.
The Bank of Russia, i.e., Elvira Nabiullina, will present the Guidelines of the State Monetary Policy, which are designed to protect the rouble and ensure its stability.
We have been working on the country’s main financial document amidst lingering imbalances in the global economy. Global trade in goods decreased by 2 percent since the beginning of this year due to tightened trade regulations as well as disrupted transport and logistics chains. In fact, 3,000 new restrictions were introduced last year alone.
Unsurprisingly, global GDP growth has been decelerating, according to the assessment by the International Monetary Fund. In the eurozone, this indicator may well fail to exceed 1 percent, which is a sign of economic stagnation for these countries.
In this environment, the Russian economy has come under immense pressure. Unfriendly countries keep expanding their packages of sanctions and restrictions. There are also new logistics, technological and financial challenges we face.
Nevertheless, we have been able to counter and offset them under the President’s leadership and by ensuring that the Government and the Bank of Russia coordinate their efforts. Moreover, we have been supporting our citizens, businesses and development projects to develop a foundation for our future growth.
GDP statistics illustrate this point. According to the preliminary estimates by the Ministry of Economic Development, this measure increased by 4.4 percent in the first seven months of the year, a more than twofold increase as compared to last year’s performance.
The real economy has been serving as the key growth driver, primarily the processing sector whose output surged 8.6 percent in January-July. There is also positive momentum in construction and agriculture.
Russian companies have been proactive in taking over the niches vacated by those who were pressured by their governments to leave Russia. By offering state support measures as part of an effort to create new logistics routes, we have created a favourable business environment across the country. In the first six months, fixed capital investment increased by almost 11 percent, which leads us to expect that many things will change for the better in terms of the way we live, as well as for various economic sectors.
This, in turn, has a bearing on the labour market, with unemployment declining to a historic low of 2.4 percent in June 2024.
Obviously, we took into consideration all these trends when drafting the law on the three-year budget based on the basic national development scenario as prepared by the Ministry of Economic Development.
While working on the federal budget, we analysed current challenges and allocated the resources necessary to implement new national projects and achieve the national development goals set by the President. The Government has held a series of strategic sessions on this matter.
It is equally essential to maintain a balanced budget. I believe that we have achieved the optimal ratio of expenditures and revenues in the current conditions. On the one hand, this budget guarantees the fulfilment of all social obligations, and on the other hand, we will be able to provide significant support to the industries that are essential for the economy, to priority sectors such as machine tool manufacturing, robotics, microelectronics, and a few others.
Finance Minister Anton Siluanov will tell us more about the figures later. I will focus on just a few key ones.
Federal revenues are projected to grow to 40.296 trillion roubles in 2025, almost 12 percent more than this year. Moreover, the proportion of non-oil and gas revenues will increase to 73 percent.
This growth will give us additional resources to fund social spending, government programmes, and projects. Total federal spending will grow to 41.469 trillion roubles next year.
A total of 24 trillion roubles has been allocated for state programmes to be implemented next year. We will approve these programmes before submitting them to the State Duma along with the federal budget.
A significant share of our resources has been allocated for the implementation of national projects, which the Government has developed in response to the President’s instruction.
The federal budget is expected to run a deficit for the next three years. In 2025, it will be at the level of 0.5 percent of GDP.
Today, we will also consider the budgets of state extra-budgetary funds to be tapped to fulfil the government’ social protection commitments. We will provide funding for medicine, including high-tech medical care provided by federal healthcare centres. We will also continue paying the benefits to medical workers.
The expenditures of the Pension and Social Insurance Fund will be increased in order to continue to pay pensions, subsidies, sick leave, pregnancy and maternity benefits, and benefits for families with children. Taking care of these categories is always a priority.
The fund’s budget includes allocations for the maternity capital programme, and the unified child benefit programme for low-income parents who need social support.
Expenditures have been planned for the indexation of insurance pensions for all pensioners including working retirees, a measure to be implemented at the President’s instruction.
Also, in accordance with the presidential executive order, we need to ensure faster growth of the minimum wage, which has to reach 35,000 roubles by 2030.
On January 1, 2025, the minimum wage will be increased by more than 16.5 percent to 22,440 roubles. This will help increase the wages of about 4 million workers.
Let’s move on to the discussion.
Minister of Economic Development Maxim Reshetnikov will report on the socioeconomic development forecast for the next three years.
Finance Minister Anton Siluanov will speak about the budget.
Mr Reshetnikov, go ahead, please.
Maxim Reshetnikov at a Government meeting
Maksim Reshetnikov: Mr Mishustin, colleagues,
Here are the basic parameters of the socio-economic development forecast for the next three years. Compared to the April scenario many parameters have improved significantly. That said, we traditionally prefer moderate and conservative forecasts. Our economy is steadily developing, notwithstanding external shocks. The GDP growth reached 5.5 percent between 2020 and 2023, which is higher, and in some cases much higher, than in many developed countries.
In 2024, we expect the GDP to grow by 3.9 percent. In total, the GDP will increase by 13 percent from 2024 to 2027. In 2024, the nominal value of the GDP will reach 196 trillion roubles, which is twice as much as in 2020. It will amount to almost 250 trillion roubles by 2027.
Now, concerning the sources of economic growth.
Investments are expected to account for about 30 percent of the GDP growth. By the end of this year, we anticipate investments to increase by 7.8 percent, and next year investment activity will be at the two-percent level, given this and previous years’ high baseline rate. Further on, we expect a three-percent increase and more, while maintaining the achieved high level of budgetary investments (which have been budgeted). The main contribution will come from investments made from corporate funds.
The upsurge in consumer demand will continue, contributing about 60 percent to the overall GDP increase. Consumer activity will be primarily driven by an increase in real incomes, largely due to the growth of real wages and salaries against the backdrop of low unemployment.
In addition, revenue growth will be supported by social payments. This includes the decisions on indexing pensions for working pensioners and expanding support measures for families with children.
Starting from the end of 2025, demand will also be supported by stabilising the rate of savings compared to the peak level of 2024.
The growing demand will be met primarily through the production of domestic goods and services and the development of the supply-side economy. We expect continued growth in manufacturing, agriculture, tourism, services and other industries that cater to the domestic market.
Taking into account the import indices in the first six months of the year, we expect the trade balance in 2024–2026 to be better than the April estimates. Inflation has started to slow down after peaking in early July. We anticipate that inflation will continue to decrease in 2025, and in 2026 we will achieve the target level.
We believe the forecast is realistic, enabling the formation of a stable budget. It takes into account the costs of implementing the tasks set out in the President’s Address to the Federal Assembly, as well as new national projects, and economic policy measures aimed at addressing the deficit of key resources.
Firstly, there is the situation on the labour market. For the second consecutive year, our economy has been growing with historically low unemployment levels, indicating that there is currently a reserve of flexibility in the labour market. Meanwhile, labour productivity in the economy is increasing, but there are still significant reserves for labour productivity growth, especially in those industries where it has been growing relatively slowly in recent years.
It is necessary to ensure that labour productivity growth exceeds the historical trajectory over the entire forecast horizon for sustainable economic growth. This is the goal of the Effective and Competitive Economy federal project. Focus will be placed on labour productivity growth in the social sphere, and special programmes will be developed for the industries in the real sector with the lowest productivity growth.
The restructuring of the economy sets new demands for the training and retraining of personnel, which is the objective of the Personnel national project. It will ensure a connection between the demand for labour and its supply in the higher and secondary vocational education system within the Youth and Children national project.
Support for investment activities is the second important element. To ensure economic growth, investments must increase at an accelerated rate, and in this regard, a wide range of instruments of state support for investments has been created in recent years. These include agreements on the protection and encouragement of capital investments, the use of the National Welfare Fund, the project financing factory, the taxonomy of technical sovereignty projects, special economic zones, concessions, infrastructure budget loans, cluster investment platforms, and the regional investment standard, among others. These instruments will be further developed as part of the Efficient and Competitive Economy national project and industry state programmes.
It is essential that economic policy ensures stability and risk management for investors, as well as encourages investment in technologically complex and high-risk projects. Mr Mishustin, you have instructed us to revise the approaches to subsidised programmes, establish their limits and unify conditions, which will be carried out. It is also important to launch a mechanism for investment tax deductions.
Thirdly, the implementation of technological leadership national projects is vital. These projects have been drafted and backed with resources, and their implementation will primarily lead to the creation of technologies and the fulfillment of natural indicators for production volumes, which will create the basis for growth not only in the three-year period but also, importantly, until 2030.
Fourthly, we must remove infrastructure restrictions, particularly in relation to what is included in the Infrastructure for Life and Efficient Transport System national projects: the development of roads, rail transport, regional airports, inland waterways, international transport corridors, and border crossings. This will support the reorientation of our economy to new sales markets.
During the forecast period, an increase in investment and the development of energy and utilities infrastructure will be ensured, and the proposed tariff solutions will be taken into account among other factors.
I would like to ask you to approve the forecast of socioeconomic development for the medium term as the foundation for the draft federal budget.
Mikhail Mishustin: Thank you, Mr Reshetnikov.
Mr Siluanov, please.
Anton Siluanov: Mr Mishustin, colleagues,
Anton Siluanov at a Government meeting
The draft federal budget for a three-year period is aimed at providing financial support for the country’s national development goals and forming a pool of resources for the implementation of 19 national projects, which serve as tools for realising national development goals.
Since the national development goals are set for a six-year period, a financial plan for the same period has been developed. Overall, over 40 trillion roubles of federal budget funds are allocated for national project activities over a six-year horizon, which is almost twice as the amount allocated for the previous six years. National projects encompass a number of key areas for the development of the country’s economy and social sphere.
The draft budget incorporates the amendments to the tax legislation adopted during the spring session. They are aimed at increasing the fairness and efficiency of the tax system and are part of the measures to achieve national development goals.
The proposed budget is designed to ensure the stability of the financial system. The budget policy is implemented in full compliance with the budget rules, ensuring a structural primary balance with the volume of basic incomes. This approach will help contain inflation and strengthen both financial sovereignty and the stability of the economy in the medium and long term.
What are the budget’s priorities?
The first is social support for the people. All necessary expenses are accounted for in the budget.
The second priority is financial support for defence and security of the country, including funding for the needs of the special military operation and support for the families of participants in the special military operation.
The third priority is ensuring technological leadership and expansion of infrastructure.
I will elaborate on these priorities, beginning with technological leadership.
Special focus has been placed on this area during the budget drafting process. The budget for the next three years includes funding for technological leadership amounting to more than six trillion rubles. What do these measures entail? They encompass industrial support for transport mobility and initiatives under the Machine Tool Construction, New Materials and Chemistry, Unmanned Aircraft Systems, New Nuclear Energy Technologies, and Support and Development of Radio and Microelectronics projects.
The funds will be allocated to R&D for manufacturing aircraft and creating marine component equipment for shipbuilding, as well as radio electronics, oil production and LNG production.
Funds are also earmarked for the establishment of microelectronics factories, as well as for the New Materials and Chemistry national project and a number of other programmes, including those previously launched in the fields of the automotive industry and agricultural machinery.
As for infrastructure, funds are being invested in the creation of a comfortable and safe living environment, including the construction of roads and the development of municipal surface and electric transport.
We will continue to implement modern urban environment and comprehensive rural development programmes.
Importantly, we will launch a large utilities infrastructure modernisation programme. A total of 180 billion roubles will be allocated for this purpose within three years.
Resources will also be allocated for preferential mortgage programmes.
Another priority we discussed is the strengthening of national defences. Funds will be allocated and have already been earmarked for supplying weapons and military equipment to the Armed Forces, the payment of monetary allowances and support for our defence enterprises.
I will now speak in greater detail about the social items of the budget, primarily assistance to those who need government support.
The annual indexation of insurance pensions for working pensioners will be resumed next year. `
The budget for children’s payments will be further increased to over 10 trillion roubles in three years. We have a comprehensive assistance system for children and families who need our support, which will receive allowances until children reach the age of 17. About 10 million people receive such assistance. About 4 trillion roubles have been earmarked in the federal budget for the payment of single allowances. The budget also stipulates the indexation of maternity capital and the payment of the remainder of maternity capital if it does not exceed 10,000 roubles.
Speaking about healthcare, allocations to that sector will exceed 1 trillion roubles within six years, as per the President’s instructions. In the next three years, we will continue to modernise the primary care system, open vascular surgery and other departments at regional hospitals, create a system of remote patient monitoring, and open new healthcare facilities.
As for education, allocations will be provided within three years for the construction of over 150 schools by 2030. We will also continue to finance the renovation of schools and the creation of modern kindergarten infrastructure. Over 40 billion roubles will be allocated for that purpose, and over 22 billion roubles will be invested in the construction of kindergartens.
The construction and equipment of colleges and the creation of world-class campus facilities will continue. As the result, we will build such campuses in Kaliningrad, Yekaterinburg, Novosibirsk, Nizhny Novgorod, Ufa, Chelyabinsk and Tomsk.
Substantial budgetary resources will be allocated for regional support, primarily, to balance the regions’ budgets, ensure their contribution to national projects, and promote their infrastructure development. Over 3 trillion roubles will be allocated annually for regional support, and about 1 trillion roubles for financing the national projects the regions are implementing.
We will continue to provide budgetary loans for the regions’ infrastructure development and start writing off their budget loan debts. As the President said in his Address, two thirds of the total debt should be written off. This will help significantly reduce the regions’ debts by 2030.
Overall, the budget has been drawn up to ensure structural balance and zero primary balance. The three-year budget deficit will not exceed 1 percent of GDP.
I ask you to support our approach to the budget policy.
Mikhail Mishustin: Thank you, Mr Siluanov. Following this meeting, we will need to hold additional discussions with our colleagues on the problems that have come to the fore during the budgeting process. In accordance with the Budget Code, we must forward the budget to the State Duma by 1 October.
