Russia will have to ‘optimize spending’

MOSCOW - Reuters

Russia’s newly appointed Economy Minister Alexei Ulyukayev (R) attends a meeting with Prime Minister Dmitry Medvedev (L) in Moscow. REUTERS photo

The Russian government, facing an economic slowdown, will have to focus its spending efforts on priority areas, Prime Minister Dmitry Medvedev said on June 24.

Medvedev was addressing a meeting of a fiscal planning commission at which new figures were released showing that federal spending would rise by only 3 percent in nominal terms next year. That represents a sharp slowdown from spending growth of 17.8 percent last year, stoked by pre-election spending that helped President Vladimir Putin win election for a third presidential term.

“It’s obvious that, in the difficult current circumstances, we need to concentrate resources on key programmes,” Medvedev said. “I also hope it is obvious to everyone that it will also be necessary to spend efficiently.”

Briefing reporters later, Finance Minister Anton Siluanov said Medvedev had backed the belt-tightening spending plan, which would uphold the terms of a so-called fiscal rule introduced last year to contain borrowing. Savings would come from reducing transfers to the state pension fund, a 5 percent in state procurement spending and unspecified changes to defence outlays, he said.

“Taking into account the slowdown in the pace of growth, revenues falling rather than rising in relation to our earlier forecasts,” said Siluanov.