UPDATE: Fin Minister: Russia must cut budget obligations, not raise taxes

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ST. PETERSBURG, Jun 16 (PRIME) -- The Russian government has to abandon some of its direct budget liabilities, although it is a very difficult decision, Finance Minister Anton Siluanov said at the St. Petersburg International Economic Forum on Thursday.

“Now is a tough period, when we must lay something aside. It is a hard way both for companies and the government to ignore direct liabilities but we must do this,” Siluanov said.

“A businessman who invests in Russia must understand that we will not raise taxes.”

He added that a tax increase can undermine future growth of the economy.

The budget must adapt to the new economic conditions within three years, Siluanov said.

The Finance Ministry will have to extend the domestic borrowing in spite of an earlier announced budgetary deficit reduction. “Even if we reduce budget deficit, we will have to increase our market presence because we have to be careful with the Reserve Fund, not waste the reserves,” Siluanov said.

He said that withdrawals of money from the Reserve Fund will decline gradually.

Budget deficit is expected at 3% in 2016. “We will expect that budget deficit will be about 3%, more or less, we will target at around this figure depending on the foreign economic situation,” Siluanov said.

The Finance Ministry will introduce amendments reducing spending of the federal budget in 2016 in September–November, he said.

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