Fin Min: Economic growth to hit ceiling of 1.5% without reforms

MOSCOW, Apr 20 (PRIME) -- The Russian economy will be able to grow by only 1.5% annually, if no reforms are implemented, Finance Minister Anton Siluanov told his colleagues on Thursday.

The minister said that the government’s budget and monetary policy has created the basis for economic recovery in Russia, but “the growth rate will hit an ‘economic potential ceiling’ with no structural changes, which is, according to our estimates, below 1.5% annually. At the same time, we have a much more ambitious goal to provide growth of above average global level of 3.0-3.5% per annum.”

Siluanov said that his ministry would like to design a 2018-2020 budget basing on new budget rules and asked Prime Minister Dmitry Medvedev to endorse the initiative.

“We need to get rid of oil dependence (to improve the growth potential)… The budget rule is a winning formula. It is a kind of prevention of the Dutch disease, which blocks the influence of price fluctuations on the budget, the exchange rate, inflation,” he said.

The official also said that Russia needs the oil price to reach U.S. $60 per barrel to balance the 2017 budget compared with $100-105 per barrel in 2013-2014, adding that the country’s oil dependence has declined.

He added that Russia has managed to weather the economic crisis of the last two years and its economy’s structure has become healthier due to a higher competitive power of Russian industries and a rising share of revenues and investment in the gross domestic product (GDP).

Siluanov also said that illegal wages amount to over 10 trillion rubles annually, because of a taxation misbalance, and added that a way-out should be found to raise a tax collection rate.

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