Vladimir Putin spoke at the council on national projects with the idea of returning to the social agenda
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Against the background of the gradual normalization of the budget deficit, the unstable exchange rate of the ruble and the acceleration of inflation, Vladimir Putin spoke yesterday at the Council on National Projects with the idea of returning to the social agenda. The state of public finances on the eve of the 2024 elections allows (in addition to instructing the government and the Central Bank to control capital outflows) to propose an increase in the minimum wage and salaries of state employees, the launch of a state-funded long-term savings program from the Ministry of Finance, a pilot project to support working mothers and a limited return to retail investors in foreign shares of the frozen assets on 100 billion rubles However, while there are no guarantees of the stability of state finances in the Russian Federation, no decisions have been made on spending that is important for the economy – on the extension of national projects and the provision of regional investment deductions through budget loans.
Yesterday’s meeting of the President’s Council for Strategic Development and National Projects was unusual: it was held via videoconference and was not announced, while the agenda mixed up the opportunistic topics of exchange rate stability (the first psychological effect of the Central Bank’s emergency rate hike is running out, the ruble weakened yesterday to 94 rubles per $1) with a discussion normalization of the budget deficit and social promises, which could be perceived as a program of the Kremlin’s traditional “electoral” spending for 2024.
“Hesitations (course.— “b”) make it difficult for business, enterprises, and citizens to make investment decisions. The government and the Bank of Russia need to make more active use of the available tools, fine-tune them taking into account the objective situation, and here we need to work, among other things, to limit unproductive, speculative demand in the economy, control capital outflow, and monitor the behavior of other financial market participants,” the president demanded at the beginning of his speech, probably to indicate that the situation is under control, but without going into details, and moved on to a discussion of social policy – it seemed that the goal was to calm the population by “opening” the package of future social spending – so far on a very limited scale.
The largest was the allocation of additional funding to state employees.
According to Deputy Prime Minister Tatyana Golikova, the Russian government will increase the wage fund for employees of federal budgetary institutions by more than 30 billion rubles. in the fields of education, culture, science and healthcare at the federal level.
The goal is to “compensate for the growth in the payroll fund that has occurred over the past and even the expected forecast period.”
In total, according to the Deputy Prime Minister, there are now 5.2 million state employees in the Russian Federation, most of whom work in regional institutions (4.6 million). A return to the social agenda is an expected event; de facto, new initiatives in this area did not appear in 2022-2023 simply due to the instability of the income situation, although before that they were put forward by the president at the first budgetary opportunity.
Also, Vladimir Putin yesterday announced a pilot project starting September 1, the goal of which is “to create a unified system of social and medical assistance for women who raise children on their own, as well as for complete families with children.”
According to Tatyana Golikova, the “pilot” will last until 2024 and will contribute to the “sufficiency and effectiveness of those measures to support the birth rate” that have already been launched. This, however, is probably about strengthening the proactive informing of single mothers about the measures and benefits that are already due to them in connection with the birth and upbringing of a child, and adjusting procedures in state structures for these purposes. And in this case, the launch of the “pilot” is unlikely to require large funds, since it can be carried out on the already created IT structures of the social fund.
The president’s optimism about the federal budget is still a guess.
It is expected that in the third quarter it will turn out to be in surplus, and for the year the deficit will remain “at the planned level of about 2% of GDP” (according to the latest forecasts of the head of the Ministry of Finance Anton Siluanov, the deficit in 2023 may be 2–2.5% of GDP). So far, according to the results of seven months, the deficit amounted to 1.8% of GDP, and July was also in deficit. This means that the authorities are hoping for revenue growth in August-September and for a more favorable situation with regional budgets. These estimates are apparently fueled by rising Russian oil prices and a notable depreciation of the ruble in July-August. Recall that the latest official data on the cost of Urals, of which oil taxes and duties are still considered, is $70.33 per barrel from July 15 to August 14, $12.3 higher than a month earlier. Since both the oil price and the ruble exchange rate affect taxes with a monthly lag, higher oil and gas revenues should be expected just in August-September. The growth of VAT collections by 20% against the backdrop of business activity records also works for this.
Expenditures, after an abnormally high level of advances in the first quarter, are significantly reducing growth rates. From the second quarter, they amounted to 2% year-on-year, while according to the results of the first quarter, expenses were 34% higher than last year. However, in the fourth quarter, as is usually the case at the end of the year, spending will again peak due to the closure of government contracts – the scale of “leveling” the traditional “budget overhang” with advance payments at the beginning of the year is limited.
Probably, because of this, two important issues – the proposal of the head of the Ministry of Economy Maxim Reshetnikov to extend national projects beyond the horizon of 2024 (now this is the last year of their implementation), as well as the launch of a mechanism for regional tax investment deductions through long-term budget loans – did not receive a decision yesterday: if the last will be “considered” at the State Council for Investments this autumn, it is not known when the fate of the national projects will be decided: the president yesterday reacted to the idea with a neutral “thank you”.
Another message focused on the positive perception of the population yesterday was the statement by Finance Minister Anton Siluanov on the preparation of a draft decree on the partial unfreezing of funds from 3.5 million retail investors who invested in foreign shares. According to the minister, we are talking about “about 100 billion rubles” that can be returned to citizens (in total, we recall that the amount of the “freeze” is estimated at 600-700 billion rubles), but the topic has been discussed for a long time and requires complex work on the exchange of assets (see “Kommersant” dated June 21).
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