Putin says poor state management caps Russia’s economic growth

MOSCOW, Oct 12 (PRIME) -- Poor state management is a barrier for Russia’s economic growth, President Vladimir Putin said at an investment forum on Wednesday.

“The main goal for us is to raise labor productivity… and a revamp of the real sector of the economy is surely connected with that, adoption of new technologies. And I am reiterating again what I have just said, improvement of state administration. The low quality of administration is one of the factors limiting economic growth,” Putin said.

“We will restrict ineffective spending and raise the efficiency of state spending in virtually all areas and at the same time will increase administration quality in the broadest sense.”

Putin said that Russia must continue to support the macroeconomic stabilization which has started recently, “continue to focus on inflation goal fulfillment among other things, to carry out responsible budget policies.”

“I will emphasize that we have reached sustainable macroeconomic stabilization over the last several years,” Putin said. “Inflation is falling: it amounted to 6.4% on the year as of the beginning of October. Let me remind you that this figure was 15.7% at the beginning of October 2015,” he said.

The president expects inflation to hit new all time low of below 6% in 2016. “Next year, in 2017, we will approach to the earlier declared goal of 4%.”

Russia is gradually reducing the key rate and banks are also cutting their interest rates, although they are still high. “Economic revival is reflected on the banking sector as well. The central bank is gradually reducing the key rate, and in general, a trend for a decrease of interest rates for loans has emerged, although their level is quite high yet, and lending to the economy’s real sector has not recovered yet, I mean, the banking loans do not ensure sustainable economic growth.”

Putin said that the Russian banking system is in a good state and does not require interventions. State banks do not receive any orders concerning the operating management.

Putin said that the central bank’s purge of banks from inefficient organization had to be done long ago but “better late than never.”

The president said separately that the government will consider a 2017–2019 budget draft on Thursday and that a 3% budget deficit planned for 2017 would be acceptable even for a world’s leading economy.

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