Budget with a deficit and optimism

The State Duma on Wednesday adopted in the first reading the bill “On the federal budget for 2023 and for the planning period of 2024 and 2025.” The vote was not unanimous: United Russia (ER), the Liberal Democratic Party and New People supported the budget, while the Communist Party of the Russian Federation and A Just Russia – For Truth (SRZP) were against it, for which they received accusations from Andrei Makarov, head of the relevant Duma committee, of “cheap publicity”. However, not only the opposition had questions about the project: the Chairman of the Accounts Chamber, Alexei Kudrin, suggested that the population “will show a restrained policy in consumption,” despite the fact that it is consumer demand, as conceived by the government, that should become one of the main drivers of economic growth.

Finance Minister Anton Siluanov, presenting the draft budget, named financial support for social obligations, Russia’s technological independence and infrastructure development, ensuring the country’s security and combat readiness of the armed forces, inter-budgetary regulation and the integration of four new regions among its key priorities. “We have provided funds for the restoration of the economies of these regions after the destruction that they are now facing,” the minister assured. According to him, all priorities are financed and taken into account in the budget.

Accounts Chamber Chairman Alexei Kudrin told the deputies that his department had submitted a 1,100-page conclusion to the draft. Among the features of the budget, he singled out “an anti-crisis focus, an increase in the tax burden on the oil and gas industry, the establishment of a new version of the budget rule, maintaining a deficit for all three years, increasing public debt, and maintaining spending at the level reached in 2022.”

There was also some skepticism about the fact that the project provides for “optimistic revenue estimates” that “require additional attention”: “It is envisaged that oil exports will grow to 260 million tons in 2025. I think we need to be prepared for tougher scenarios.”

The head of the Accounts Chamber also noted that consumer demand is supposed to be the main driver of the economy, while Mr. Kudrin himself “has fears that the population will show a more restrained policy in consumption for this period.”

The head of the budget committee, Andrey Makarov (ER), in response to 1,100 pages from the Accounts Chamber, showed his own weighty stack of sheets, saying that he did not even count the pages of his committee’s summary conclusion, which included reviews of the country’s leading economic institutions. He recalled that the adoption of the budget in the first reading was supported by all committees of the State Duma and more than a third of the regions – all those who sent their opinions – and immediately explained why the budget became scarce: “Can we sell so much oil, can we get such an amount of income? Our production is going down. As soon as we talk about income, we understand that these incomes still need to be received. These incomes, colleagues, are in serious doubt. Hence the deficit budget.

At the same time, Mr. Makarov is “particularly concerned” by energy development programs and, in particular, the reluctance of the Ministry of Energy to allocate money for mining towns.

The deputy even threatened that if the government did not resolve this issue, the Duma would introduce its own amendments: “We ourselves will withdraw money for mining towns from the salary of the Ministry of Energy.”

Economic Policy Committee Chairman Maksim Topilin (ER) emphasized that the draft was being prepared under “completely extreme conditions, when it is precisely those components that form the basis of budget formation that are subjected to the greatest sanctions pressure.” And he expressed the opinion that the forecast provides for “optimistic indicators.”

After that, the deputies moved on to questions. Vladimir Kashin (KPRF) was interested in why, with a budget deficit, “tens of trillions of rubles flow past the country’s cash desk”: “Offshores, arrests of gold and foreign exchange reserves, a resource-based economy – everything is built today to please the oligarchy. At the same time, our progressive tax laws, the monopoly on alcohol are not accepted, as well as social laws, for example, on children of war. When will we see the victory budget, the development budget?” Anton Siluanov calmly replied that he had read the proposals of the Communist Party of the Russian Federation and, in his opinion, they would only lead to an increase in inflation, which would “eat up all our investments and social spending.”

Mikhail Delyagin (SRZP) asked why the government is freezing 939 billion rubles next year. in the National Wealth Fund and immediately takes net loans of 1.7 trillion rubles.

The Minister of Finance retorted that “if we do not have a reserve in case of unforeseen situations, then the price of our borrowing will be completely different.”

Sardana Avksentyeva (New People) drew attention to the reduction in funding for projects related to the overhaul of schools, the identification of talents among schoolchildren, while spending on the patriotic education of young people is increasing eightfold. “We believe that true patriotism is modern new schools, young talents being realized,” said Ms. Avksentieva. “It seems to me that the issues of patriotic education are now more important than ever,” Mr. Siluanov did not give up. As for schools, in general, the budget provides for an increase in spending on education, “which includes these issues that you mentioned,” the minister assured.

Then the representatives of the factions spoke. Communist Party leader Gennady Zyuganov said that the Communists would not vote for the budget draft prepared by the government, as it is “out of touch with the regions” and does not provide sufficient funding for social areas, unlike the alternative prepared by the party. He was immediately answered by the chairman of the Liberal Democratic Party, Leonid Slutsky, according to whom to vote against the budget in the current situation means “to pour water on the mill of those of our enemies who would like to provoke discord between political forces.”

The leader of the SRZP, Sergei Mironov, however, was not afraid to deepen the “discord”, saying that the Socialist-Revolutionaries would also vote against and also prepared their own version called the “economy mobilization budget”, which is “more than 9 trillion rubles.”

However, he made a reservation that the government document gives grounds for peace of mind “for our defense capability.” And the main claim of the SRHR to the budget is that “money is put into a jug” instead of “develop infrastructure projects.”

The first deputy head of the New People, Vyacheslav Davankov, called the project “a compromise given the current difficult circumstances” and said that his faction would support the document. At the same time, he expressed the opinion that in order to develop the economy, it is necessary to improve the public procurement process, because “there are trillions of rubles of inefficiently used money,” and to provide for free money that the regions could use.

Andrey Makarov summed up the speeches from United Russia factions. He reminded the oppositionists who did not want to vote for the project that the budget included an increase in spending on social areas, and called the position of the Communist Party of the Russian Federation and the SRZP “cheap political PR.”

As a result, the draft budget was supported in the first reading by 319 out of 450 deputies, 80 were against, the rest did not vote.

Ksenia Veretennikova