ALEXEY VEDEV: “HYPERINFLATION IS NOT A THREAT FOR THE RUSSIAN ECONOMY”

Alexey Vedev, Head of the Financial Studies Department at the Gaidar Institute, told radio station “Govorit Moskva” that deficit of the RF government budget corresponds to the Maastricht criteria and does not exceed 3% of the GDP.

“Hyperinflation is not a threat for the Russian economy. There is the Maastricht Agreement for the Eurozone countries, where the deficit figure up to 3% of GDP is considered absolutely acceptable. Therefore, the rumors about hyperinflation, which is supposed to come and that the budget deficit is very scary, in my opinion, are false.”

Alexey Vedev noted that the state can borrow money on the domestic market or print more money to reduce the budget deficit.

“I think money will be printed. The demand for money is, roughly speaking, proportional to gross domestic product. There is nominal growth when the demand for money increases. Naturally, extra money is being printed every year. It is a question of scale. I don't think there's anything wrong with that. And that is exactly what I call a stimulative fiscal policy. A budget deficit means that the government gives more money than it takes from the economy. However, a surplus is exactly the opposite, when the state takes in more money than it gives.”