Ministry sees investment share of Russia’s GDP at 25% in 6 yrs

MOSCOW, Jun 27 (PRIME) -- The Economic Development Ministry has prepared a plan to raise the share of investment in Russia’s gross domestic product (GDP) to 25% over six years from the current 21%, Minister Maxim Oreshkin told reporters on Wednesday.

In March, President Vladimir Putin ordered the government and the central bank to work out a plan by July 15 to raise the share of investment in Russia’s GDP to 25%.

“From the point of view of investment, there are three key blocks that will become the basis for investment growth. The first is higher infrastructure investment. Here, we see the infrastructure fund reaching about 1.5 trillion rubles a year to reach the forecast level. The second is higher investment in housing construction, including through active growth of mortgage lending,” he said. “The third is active growth of investment in the processing industry and in services.”

The plan’s development has three directions. The first is system-wide measures, including ideas on general improvement of investment climate and access to infrastructure. The second direction is financial measures that would secure investment growth and changes in the structure of financing in the Russian economy. The third is elimination of sectorial restrictions that restrain investment growth, he said.

The plan also encompasses introduction of long-term tariffs of natural monopolies that would make cash flow of companies more predictable. It is also important to raise investment in power generating capacities to 1.5 trillion rubles over the next six years to prepare Russia’s power system to the growing economy, he said.

Higher crediting, better investment of pension savings, and a reduction of capital outflow are necessary to raise the share of investment in Russia’s GDP to 25%.

“Let’s say that 0.5 (percentage points) of GDP will be financed by the budget via the development fund … growing corporate loan portfolios of banks and investment in bonds should add 0.5 (percentage points) more, and we will have to grow by about 9% more per year over the next six years to ensure the portfolio,” he said.

Lower capital outflow should add another 0.7 percentage points, while higher companies’ profit may add 0.6 percentage points, and 0.5 percentage points are to come from households’ long-term savings, including pensions, he said.

The ministry wants to define key performance indicators for each ministry setting specific goals for investment growth in each corresponding sector of the economy, he said.

The ministry also plans to work out new solutions to improve Russia’s business climate every six months. The first package of about 600 measures for 15 industries has already been prepared together with other ministries, the Agency for Strategic Initiatives, and the Russian Union of Industrialists and Entrepreneurs, and the Economic Development Ministry is to start implementation of the measures this autumn, he added.

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