Agenda: Federal budget indicators and the socio-economic development forecast for 2014 and the planning period of 2015-2016

Introductory remarks by Dmitry Medvedev:

Even the most difficult and unpleasant work, the most unrewarding efforts, get finished at some point. Our hard work to balance the federal budget amid a slowdown of economic growth in Russia and a recession in Europe is coming to an end. We are completing this draft federal budget for the next three years. Let’s now discuss any questions that remain so as to present the final version at tomorrow’s Government meeting.

An adjusted forecast of Russia’s socio-economic development in 2014-2016 has been prepared with due account of the global economic situation. Unfortunately, we had to adjust the key budget parameters, mainly in the revenue section. The expenditure part will have to be corrected accordingly, of course, although the protected expenditures will have to be kept unchanged, as well as those that fulfill the presidential orders and other Government priorities.

Decisions to cut investments should also be well balanced. It is important to continue financing projects and programmes that are strategically important for further economic growth. I am referring to some of the planned infrastructure facilities, regional development, and restructuring of the economies of single-industry towns. It is also important to finance projects involving innovation and modernisation. Therefore, despite the limitations we face, we will make every effort to continue supporting the projects I mentioned, as well as agriculture, manufacturing, and production projects involving sophisticated technology. Let’s hope that they will eventually become competitive and profitable, mainly by restraining the growth of infrastructure monopolies’ prices.

As for cutting costs, the Government naturally has to set an example to follow. We need to start with Government agencies and companies in which the Government holds large stakes.

The state procurement system should be seriously revised, to make it more accessible for small and medium-sized businesses and more open for public scrutiny. We are having state companies dispose of non-core assets and optimise operating costs. Government staff costs have to be reduced too.

The most complicated problem is how to cover the budget deficit. Privatisation revenues are one important source of funding (that’s why the privatisation programme is so important). Another source could be increasing Government borrowing in Russia and abroad. Also, we should always keep an eye on the timely financing of social expenditures and funds: interrupted or delayed financing of these expenditures is unacceptable – these are protected expenditures, as I said.

Drafting a federal budget is an extensive cooperative effort, with all the Government members involved in it, but the key role is played by the Ministries of Finance and Economic Development, of course. We have discussed budget issues in meetings I or my deputies have chaired, as well as at ministries and agencies.

We are all familiar with the figures that will be announced today. We do not have much time left. Moreover, to tell you the truth, we do not have much room for adjusting these figures either. Therefore, I hope our discussion will be businesslike and concise, since we are going through a difficult period. The decisions will have to be taken at tomorrow’s Government meeting.

Let’s begin our work.

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