Finance Minister sees Russia’s 2018 inflation at about 3%
SOCHI, Feb 15 (PRIME) -- Inflation will amount to about 3% in 2018 depending on prices for oil, sanctions, and growing wages, Finance Minister Anton Siluanov told reporters on Thursday on the sidelines of the Russian Investment Forum.
“Wage payouts increased significantly in January. This has an obvious impact on inflationary consequences. On the other hand, we have a rather tough budget policy. This is why we think that inflation will remain close to the expected level of 4%. It is difficult to say whether it will amount to 2%. I think it will be closer to the middle between 4% and 2%, at about 3%,” he said.
“Inflationary factors will be affected by oil prices, by implementation of sanctions, and by the reaction of prices to higher wages of public employees at first and of private employees later.”
The ministry does not plan to cut planned domestic borrowing in 2018 from 1.448 trillion rubles and net domestic borrowing from 817.04 billion rubles. “We already have a slightly smaller amount of borrowing this year. We will support our financial market here, we will refinance our liabilities in the first place with these borrowings and use them to finance our spending,” he said.
He also confirmed his previous estimate of 2018 federal budget surplus of 1.5–2% of gross domestic product (GDP) if oil prices remain the same.
The ministry is still against introduction of a progressive personal income tax as it already has a differentiation in taxation of individuals, including taxation through the transport tax. “We should not touch the tax that works well and is collected well. The increase of the rate, the progression will prompt people to think how to avoid it, the flat 13% scale is competitive,” Siluanov said.
Provident Vladimir Putin is going to address to the Federal Assembly, or both chambers of parliament – soon, and it will include directions for further movements in the sphere. “Our goal is not to collect something from business, but to make the taxation system more transparent and simple,” he said.
The ministry is also working on a substitution for the business property tax. “As some businesses said, it is a tax on upgrades, as we tax the property that has not been amortized yet, so it is new property,” he said, adding that the authority is studying different ways to substitute it, but not with the sales tax.
There will be no plunge in defense spending in 2018, but some of it may be transferred to 2019. Previously, the Defense Ministry had to pay spend all unused budget funds for the year to make prepayments at the end of the year not to lose budgeted money, but now the Finance Ministry has developed a mechanism allowing the military to shift unused money to the next year, Siluanov said.
“This was the reason for a slight cut in our defense spending in 2017, which fell by 200–300 billion rubles,” he said, adding that the spending was transferred to 2018.
International rating agencies Standard & Poor’s (S&P) and Fitch are to decide on Russia’s rating on February 23, and Siluanov expects them agencies to make an objective estimate of the Russian economy.
Currently, only Fitch rates Russia at the lowest investment grade, while the other two rate Russia as junk – S&P at BB+ with a Positive outlook, while Moody’s at Ba1 with a positive outlook.
Russia has weathered difficult times, the government implements an understandable and tough policy, efficient monetary policy, and restored economic growth. “I would definitely like the rating agencies to take an objective look on the situation. I think they took into account the uncertainty with the sanctions while making their previous decisions. We still have some uncertainty now, but it is definitely on a lesser scale that it was a month earlier,” he said.
(57.5899 rubles – U.S. $1)