ELENA PERMINOVA ON BUDGET AND SOCIAL PROGRAMMES
The Federation Council approved federal budget for 2018 and for target period of 2019 and 2020. Agata Korovina, journalist of the EWC, had a conversation with Elena Perminova, representative of executive authority of the Kurgan Region. They discussed what spheres of economy will form a budget, what projects of urban beautification will be realised, and how the national debt of the constituent entities will be refinanced.
- What prognoses do the parliamentarians do about social-economic development of Russia?
- If speaking briefly: rates of growth of GDP in Russian Federation will amount to 2.1% in 2018 and 2.3% by 2020. We think this is a bit conservative prognosis but we should understand that plans must be implementable. We can’t just write big rates of growth. The whole economy must be working.
- By what means will economy work? As I understand, the oil is of no further use.
- The manufactures must show good results. There has been a growth in agriculture since 2016. Today it is the powerhouse of economy’s development. Key investors support this sphere. The government worked the whole set of measures to support the agriculture. In 2018, the federal budget will increase costs on these goals by 20 billion roubles and 2 more billions for support of producing farm machinery. Light industry also shows good rates of growth. Recently the Ministry of Industry and Trade held the exhibition of baby goods Made for Childhood. We are very interested in the situation where the toys, clothes, and footwear would be able to compete with import ones.
The Industrial Development Fund works since 2015. It co-finances industrial projects in various regions on a competitive basis. For example, the Fund voted 500 million RUB for construction of pharmaceutical enterprise in Kurgan Region in 2016. The enterprise is already working and producing necessary medical drugs. 10 of them are life-saving.
- Is there any ‘safety bag’ for the budget?
- Of course. If speaking in absolute terms, the budget for 2016 amounted to 13.6 billion RUB. However, 2016 was challenging for our economy. As a result, the budget shortfall was very big – about 3 billion RUB. The Reserve Fund and National Wellbeing Fund covered the shortfall so we were able to fulfil all social obligations towards our citizens: distributing pensions, salaries, and social benefits on time.
At the beginning of 2017, we were afraid we would use all the reserves. That’s why we particularly worked this issue out. There must be a ‘safety bag’ as you have said. It doesn’t matter how much will the oil cost. Only 40$ per barrel will be distributed on social and other spendings. The rest will be put into the National Wellbeing Fund. We expect there will be more than 4 trillion RUB by 2020.
- What is the exact way of forming the budget?
- The federal budget is formed by means of taxes, imposts, value added tax, and tax on natural resources. Excise duty also helps form the budget. Then the money is distributed under budget sections. There is a restricted part of budget (for national defence) and open one available for everyone. Every citizen can observe in the online mode how the budget is passed, incomes, spendings, on what goals the money is spent.
- The maternity capital index linking is not provided for until 2020. Why?
- The federal budget is balanced for the next three years. We will adopt a new budget in 2020. We will also consider this issue. In the meantime, the old programme is still working: every family where the second child has been born has a right to receive the maternity capital. This is a substantial financial support.
- Will the order of giving out the free drugs for people with rare diseases be the same?
- Nowadays it is regions that must provide people having orphan diseases with free drugs. However, these drugs are very expensive and not every region can afford them. During budget formation for 2018, Valentina Matvienko came to an agreement with the Prime Minister that at least children must be fully provided with necessary drugs. In the nearest future, the Ministry of Health will centrally buy expensive drugs. These drugs will be distributed between region in sufficient quantity and at proper time.
- What about hot-button issue of pensions?
- The pensions will be staged on 3.7%, meanwhile the inflationary pressures of 2017 are rated as 3.2%. It means the pensions will increase a bit.
- Will there be any programmes for teachers and doctors, particularly in the rural areas?
- We have programmes for rural teachers but support of specialists is carried out by means of regional budgets. The teachers enjoy reduced payment for public utilities; there are special bonuses for those teachers who move to the countryside. Every region decides itself how to help teachers. There is a very similar programme for medical staff but through the federal budget. It is not a secret that there is a lack of medical specialists in the regions. There is a programme that provides doctors who move to the countryside with houses. About 1.3 million people have already moved to the countryside since 2012.
- Where did you get the money for big and expensive stadiums from?
- It was planned for the FIFA World Cup in 2018. All finances came from 3 sources: the federal budget, investors, and regions where the stadiums were built.
- Are the regions able to give such sums of money?
- More attention is paid to regional budgets now. 1% of income tax was accumulated in the federal budget since 2017. It was transferred to regional budgets. As a result we had 100 billion RUB more to help the regions. It helped our regions because they all are under different economic and climate conditions. I don’t downplay the importance of the regions. They should increase their tax potential, form extra sources of income. The most important thing for us is to be sure that citizens have equal services in education, medicine, and social care.
In 2018, the Fund for Financial Support of Regions will increase on extra 35 billion RUB. The Ministry of Finance calculates the ‘minimum budget’ for every region. If there is a lack of money, the Fund helps with it.
The President also suggested refinancing of regions’ national debt.
- The regions have debts?
- Of course. The national debt of all entities was 2.2 trillion RUB by the 1st of October of this year. Only 42% of this debt are publicly funded loans. The others are borrowed from commercial banks.
We must do something with this huge debt. These budget loans will be refinanced for 7 years. The regions will be able to pay only 5% of the sum for the first two years. However, if they work hard in 2019 and 2020 and get incomes higher than the inflation rates, their restructurisation will be for 12 years instead of 7. Moreover, new treaties will be signed with commercial banks. The regions will not pay more than 8.5%. This is very profitable.
- The tourism bring great money to the budgets. It really helps some regions such as the Altai Territory, which has beautiful nature and many significant historic cities. Now there is a project ‘My Street’ in Moscow. It really helps decorate and change the city. Will there be similar programmes for other regions?
- Yes. This is a topical issue. We often discuss it in the Federal Council. We have money for provision of urban amenities. We have a federal programme since 2011. It is aimed at creating high quality tourist infrastructure. Even today about 50 million people travel across Russia.
Agata Korovina, news agency of the Eurasian Women’s Community
Translated by Yan Zarubin