ILYA SOKOLOV, ALEXANDER DERYUGIN: “BUDGET AMENDMENTS SPECIFY COST ITEMS AND HAVE A SOCIAL ORIENTATION”

According to Alexander Deryugin, the Researcher of the Budget Policy Department, and Ilya Sokolov, Head of the Budget Policy Department at the Gaidar Institute, government amendments to the draft budget for 2021-2023 specify cost items aimed at mitigating the impacts of the crisis and have a clear social orientation. The TASS quotes the opinion of the experts.

There are plans that on November 24, the State Duma will consider the draft budget for 2021-2023 in the second reading. Working on amendments to the document, the State Duma Committee on Budget and Taxes considered about 900 amendments. Due to deterioration in the economic environment and a reduction in regional revenues, the government proposed to allocate them additional Rub 100 billion to ensure balanced budgets in 2021.

“It is these amendments that specify cost items aimed at mitigating the impacts of the crisis and extension of structural modernization in the Russian economy and social sphere”, Ilya Sokolov noted.

According to Ilya Sokolov, an increase in productive spending will have a positive effect on the rate of economic growth starting already from 2021 and add about 0.2 percentage points of annual growth to the GDP.

According to Alexander Deryugin, the amendments have a clear social orientation (funds have been allocated to pay households with children, free meals for schoolchildren, primary health care).

Experts emphasize that in spring, when the first decisions to support industries have been taken, there were rather theoretical forecasts about the pandemic impact on the economy. However, currently, one can see the full picture of the affected industries and understand clear contours of the second wave of the pandemic in contrast to mid-September, when the budget bill was in the final stage of development.

Thus, a number of measures is associated with the support of the affected industries according to the updated nationwide recovery plan.

“It is now clear that state policy measures for the next three years are focused primarily on supporting the most vulnerable population groups. In particular, in 2021, about Rub 590 billion is envisaged in the budgets of the fiscal economy for monthly payments to low-income households with children under 7 years old,” Ilya Sokolov noted.

Alexander Deryugin added that according to the budget, additional funds will be allocated to small businesses or they will enjoy tax breaks. In addition, funds will be allocated at the federal level to pay salaries, provide hot meals for primary schoolchildren and pay to head teachers.

In terms of primary health care, additional Rub 90 billion will be allocated in 2021-2023 per year.

"It should be noted that these amendments actually complete the distribution of previously reserved expenditures for inter-budgetary transfers by regions, which will facilitate the latter to approve their own budgets for a three-year period," Sokolov believes.

According to Ilya Sokolov, a positive trend in inter-budgetary relations in the next three years is the maintenance of sufficiently high volumes of inter-budgetary transfers to the regions compared to 2019, which will have a positive effect on the parameters of the balance of regional budgets.

Experts point out that the budget also envisages the provision of untargeted financial assistance to the subjects of the Russian Federation, i.e. about Rub 100 billion will be additionally allocated for these purposes in 2021.

Alexander Deryugin added that additional financial assistance to the subjects of the Russian Federation will be provided within the previously envisaged amounts. In his telling, the government is trying to ensure the maximum amount of funds, i.e. all subsidies and subventions to be distributed between the regions by the budget law, and only a small number of other inter-budgetary transfers will remain.

“Actually, the amendments on a national scale are still rather technical, that is, they distribute financial resources at some narrow points, but I would not say that this will be some kind of significant increase in GDP growth rates,” he noted.