Alexei Vedev: Not a Single Country Pursues Such a Policy: Save Amid Stagnating Economy

Alexei Vedev, Head of the Financial Studies Department of the Gaidar Institute shared with his opinion on Russia’s policy regarding the external debt market.
The publication writes that Russia has been currently excluded from the debt growth process. However, the economy is facing no fewer issues.

“For the coming three years (2020-2022) we plan a surplus budget and purchase of government bonds for RUR 1.3 trillion and reserves hike,” says Alexei Vedev.

He criticizes authorities for such an approach assuming that amid stagnating economy (this year GDP increases by barely 1% according to forecasts – instead of increasing reserves and early payment of debts to the external creditors but foster economic growth in the country.

“I do not understand such concern for budget surplus, such enormous reserves. Why do we need such overcautiousness? You cannot put aside for a rainy day no matter how hard you try. One can prepare for a crisis only if the economy is on the rise,” – explains Vedev.
He paid attention to the fact that when Alexei Kudrin was the Finance Minister was hoarding on the eve of the 2008 crisis then it was justified at least by the fact that the Russian GDP was growing at high rates as in India and faster than in China.

The expert concludes that to copy experience of hoarding petro dollars in reserves is useless.

Even Greece incurring huge debts under the pressure of three European creditors at the earliest available opportunity announced that plans to develop the economy and not save.

“Not a single country in the world as far as I know does not pursue such a policy: save amid stagnating economy. If the authorities have any motivation for that than most likely it is a political and not a financial rationale,”- concludes Vedev.