Financial guarantees: Dmitry Medvedev instructed to create a new system of financial management in Russia

Financial guarantees: Dmitry Medvedev instructed to create a new system of financial management in Rossiyanochka link
12 September 2019, 21:10

Vladimir Agoev
The Russian government until October 1 to prepare the concept of the new PFM system. This was stated by Prime Minister Dmitry Medvedev on the sidelines of the Moscow financial forum. According to the head of the Cabinet, the project will allow to attract additional private investment in the economy is 20 trillion rubles. The interest of foreign investors to the Russian participants of the forum associated with the financial stability of the country, reduce dependence on oil prices, slowing inflation and de-dollarization.

  • RIA Novosti
  • © Ramil Sitdikov

The Russian government will prepare a new system of public Finance management. On Thursday, September 12, Prime Minister Dmitry Medvedev during a speech at the Moscow financial forum. According to him, before October 1, the corresponding concept will have to provide the Ministry of Finance and economic development.

As explained by the head of the government, the project aims to support investors and entrepreneurs will have to increase private investment in the Russian economy. So, the new system proposes to cease operation of old normative acts in the field of control and supervision. The founders of the major investment projects will be given special conditions and state guarantees.

«I hope that the document will soon be finalized and approved and we’ll submit it to the State Duma. According to optimistic estimates, and they have always an optimistic on this subject, it will accumulate in particular in the framework of national projects investment of somewhere between 20 trillion rubles,» — said Medvedev at the plenary session of the forum.

During the discussion first Deputy Prime Minister — Minister of Finance Anton Siluanov has reminded that within the framework of national projects, the volume of investments in the Russian economy is expected to grow to 25% of GDP. According to him, today the figure is close to 20-21%.

At the same time Dmitry Medvedev pointed to the continuing interest of foreign investors to the Russian market. So, for the past few years, Russia has managed to significantly strengthen the financial system. This is largely due to the decrease in dependence on oil prices.

According to the Finance Ministry, the Russian economy may within a few years to maintain stability even in case of a fall in oil prices to $30 per barrel and below. This was on the sidelines of the forum in an interview with RT told the Deputy head of Department Vladimir Kolychev.

«Over the past few years we have accumulated liquidity reserves amount to nearly 7% of GDP. This means that within three to five years, the country may, without consequences for the economy to live with oil prices and $30 per barrel. If the oil shock is shorter, and the fall in oil prices below this level we will survive without any significant negative effects», — said Kolychev.

The second key factor of financial stability Dmitry Medvedev called moderate inflation. According to the forecast of Ministry of economic development, before the end of 2019 the index of price growth in the country should fall below the target level of the Central Bank (4%) and to be of the order of 3.6—3.8 percent. As explained by the Prime Minister, the emerging slowdown in inflation has allowed the record to reduce the rate of the Central Bank.

Since the beginning of 2019 the Bank of Russia lowered the key rate on 0,25 percentage points — to 7% per annum. The value was the lowest over the last five years. Recall rate reduction is needed to promote business activity and economic growth in General. So, in the long term, the actions of monetary authorities lead to cheaper loans, increase domestic demand and investment.

Although the decision of the Bank of Russia provided financial stability, the regulator’s policy does not allow us to significantly accelerate economic growth in the country. This was during a discussion at the plenary session of the forum said the head of the Central Bank Elvira Nabiullina.

«In our view, low rates of economic growth in our country is primarily caused by structural factors, but here monetary policy is virtually powerless,» — said Nabiullina.

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One of these factors Nabiullina called the intensification of trade wars and a General slowdown of the world economy. According to her, in the current environment, the regulator will exercise caution and will not drastically lower the rate of interest. This strategy will provide a predictable environment in the Russian market and investor confidence.

Note that in the braking conditions of the global economy, Russian authorities still hope to reach a GDP growth rate Russia higher than the average. The Ministry of economic development, in 2019, the economy will grow by 1.3% in 2020 and by 1.7%, and in 2021-m will accelerate to 3.1%. The head of the Ministry Maxim Oreshkin said on the possibility of growth of 2.1% in 2020.

In the coming years one of the key tasks for strengthening the financial stability of the country must be gradual abandonment of the dollar, the head of VTB Andrey Kostin.

«I would only be to the stability of the financial would have added another process of de-dollarization, which actually goes, and it shows. The experience of 2008, I can say that this involvement in the dollar area of our country then had disastrous consequences. Now the situation has changed significantly,» — said Kostin during his speech at the forum.

According to the Bank, in 2018 Russia halved the share of US dollar in their international reserves from 45.8% to 22.7%. At the same time the share of Euro in foreign exchange reserves of the country increased by almost half (from 21.7% to 31.7%), and Chinese yuan — five times (from 2.8% to 14.2%).

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