Kommersant: “Crisis Spares Economics Ministry’s Dreams”
Finance Ministry will fulfil Concept 2020 when oil reaches $100 per barrel
Alexei Shapovalov
On Tuesday, Prime Minister Vladimir Putin signed a long-term concept of Russia's social and economic development through 2020. Carefully developed by the Economic Development Ministry over the past two years, the document is based on an average projected global economic growth of 4.2% and a global oil price of $99 per barrel from 2008 to 2010.
However, the Finance Ministry asked the Government to put off submitting the budget strategy through 2023 until April 1, 2009, because next year's economic policy will obviously be guided by immediate calculations rather than a long-term strategy.
The long-term social and economic development concept, known as Concept 2020, has been in the works since 2006 by the Government and the Economics Ministry, upon Mr Putin's instructions. It was signed by the Prime Minister Tuesday.
The discussion between the Finance and Economic Development Ministries over Concept 2020 was the highlight of the Government's macroeconomic policymaking in 2007 and 2008, up until the debate over the size of government investment and a stable tax regime as a factor in an attractive investment destination became eclipsed by the financial crisis.
In late September, the Prime Minister ordered the agencies concerned to settle disagreements over Concept 2020 in 48 hours, and the document was approved by the Government on October 1, with the proviso that it still needed to be finalised. Economists said then that adopting Concept 2020 as it was would be politically naïve.
The final version that Mr Putin signed Tuesday envisages a double increase in the country's GDP, something sought since 2000. "Russia's GDP will double in 2009 from its 1999 level, a two-fold growth in a decade," the document says.
"Russia's high social and economic performance indicators, its macroeconomic stability and financial strength are the result of an effective systemic reform," the document reads.
However, the Government hasn't ventured to reconsider Concept 2020: Mr Putin simply signed a document that should guide the federal and regional authorities' work on their policies, plans and performance evaluation.
It certainly isn't an easy task now that the situation has changed. The Economics Ministry must have failed to change the reference and the macro-indicators of the economy's innovation development through 2020, the underlying assumption of Concept 2020, at short notice.
For example, the document includes the 2007 consumer prices growth of 9%, while in reality, inflation was 11% last year. Oil prices around $99 per barrel in 2008-2010 are a feasibility condition of Concept 2020, while the global economy is expected to grow by 4.2% annually during that period.
In 2007, global GDP went up by a record 4.9%. However, the OECD released a forecast Tuesday envisioning a slowdown in 30 EU countries (down 0.4%) in 2009, and only an insignificant growth in 2010 (up 1.5%).
Russia's average annual GDP growth is predicted at 6.8% during that period, the same as this year, although the Economics Ministry registered a slowdown in October 2008 and growth estimates now vary between 0% and 3.5%.
Mr Putin also endorsed the guidelines for the Government's work through 2012 and a list of projects to be implemented along those guidelines. According to the plan, the Government should implement a series of measures in 2010 to create an "internal long-term investment resource," meaning improving Russian banks' reliability and encouraging funded pension schemes, insurance market, and pooled investment.
The Government expects an increase in investment fund assets, pension funds, and the National Pension Fund reserves to 7.5% of GDP in 2010, up from 4.2% in 2008, and to 10.3% in 2012. The banking sector's shareholder equity should grow to 10% of GDP in 2012 from the current 8%, and its total assets, to 80% of GDP in 2012, from 63% now.
However, the Finance Ministry is unlikely to come up with a long-term federal budget strategy through 2023 before November 20 as planned. That strategy was to contain long-term budget parameters to "reflect" Concept 2020 "in budget terms."
Russian news agency Interfax quoted the ministry Tuesday as asking the Government to move the deadline to April.
The source explained the ministry's request by the need to factor in a new macroeconomic forecast for 2008-2012 that the Economics Ministry would submit on December 1. That forecast will probably contain figures slightly different from Concept 2020.
The delay gives one hope that the Finance Ministry's document produced in April will be even more realistic than the one containing the Economics Ministry's dreams for the next 12 years.
