Reduction or even zeroing the interest rate of the Central Bank, the mitigation or complete cancellation by the Ministry of Finance budget rules, the tax on currency speculation, temporary introduction of progressive taxation, the inclusion of the printing press, the printing of the national welfare Fund (NWF), reshuffle. Such a diverse list of measures to rescue the economy on the verge of collapse proposed by the academics and former government officials. What kind of growth model we need to Finance this way? The answer is vague: non-resource with a focus on human capital. This description is not enough the main characteristics is the absence of barriers to the emergence of new profit centers.
Russian Academy of Sciences (RAS) will prepare proposals in the national plan of action for the recovery of the economy, which President Vladimir Putin instructed the government to prepare by June 1. This was reported on Thursday in the academic framework of the Moscow economic forum, President of the RAS Alexander Sergeev.
The participants of the online session of the forum tried to evaluate what will be the fall of Russia’s GDP this year, considering the accumulated during the stagnation problems of the oil collapse and the shock caused by the pandemic. The estimates differ significantly.
For example, according to the forecast of the chief economist of Vnesheconombank Andrei Klepach (previously worked in the Ministry of economic development), this year’s economic slump may be 5% at an oil price of about 34 dollars. per barrel.
Similar expectations from the President of the National research Institute of world economy and international relations Alexander Dynkin. Referring to the leading indicators, he predicts a fall in GDP for the year to 5.5–6%.
More alarming forecasts done by academician Abel Aganbegyan. “In 2020 we will have a deep structural crisis, he said. – In my opinion, GDP will decrease by approximately 8%, real disposable income will fall by 8-10%. The number of poor will rise from 18 million to 30 million and even maybe more.”
According to Aganbegyan, the crisis in social terms is much deeper than the crisis-2009. Especially if you consider that “real disposable income decreased by 8% even before the current crisis, in a period of stagnation, and the number of poor increased by 5 million people in the previous years.” Finally, the real crash predicts the member of the Presidium of the Russian Academy of Sciences Robert Nigmatulin.
He spoke about the method of calculation, based on engineering methods used to analyze multivariable systems. According to these calculations, in 2020 Russia’s GDP given the oil shock and pandemic influenza restrictions will be reduced by 18.5%. This baseline scenario. The worst option would involve a reduction of 23%.
Forum participants offered a wide variety of measures of salvation, from the quite mild to the truly radical.
In particular, according to Aganbegyan, the anti-crisis program for 2009 was estimated at nearly 11% of GDP: “If translated into today’s money, it’s about 12 trillion”.
Now, as noted by the academician, those activities that are scheduled, “not much exceed the amount of 2 trillion rubles”. “Apparently, there will be additional measures. But it is unlikely at the current rate we will spend over 4% of GDP,” says Aganbegyan. According to him, the salvation of the economy and welfare of the population need to spend 10-15 trillion a year: “Of them irrecoverable money 4 trillion, up to 6 trillion rubles. And the majority can be spent in the form of low-interest or interest-free loans from the state compensation.”
Of course, recommendations were made to the office of Elvira Nabiullina: “it is Extremely important to make Central Bank, the Bank for socio-economic development”. “The assets is the main money bag, which contains about 96 trillion, These giant funds have not been very effectively used,” – said Aganbegyan.
His conclusion: the banking system must solve problems in cooperation with the government. And that crisis go to socio-economic growth, not a return to stagnation, it is necessary to annually increase by 10-15% investment in fixed capital in the knowledge economy and in human capital. Then, according to the forecast of the academician, we will be able to come up with 2023 by 3 percent (and then more) GDP growth.
“If you fail to make the non-oil economy, we again have to prepare for the next crisis,” agreed the scientific Director of the RAS Institute of Economics Ruslan Grinberg.
The Minister Anton Siluanov also recommendations were made. “There are many risks associated with the exit from the crisis. Many support measures come to fruition during this year. And it will give more of a setback from the point of view of consumption, income of the population in the following year. Indeed, in the framework of the budget rules we would have to reduce budget expenditures”, – said Klepach.
In his opinion, the recovery of the economy and transition to a new quality of growth is necessary to depart from the fiscal rules or to modify it, otherwise we will not get a significant rebound advantage. “As I understand it, yet decided not to print the national welfare Fund, with the exception of the money spent on the budget rule for current expenditures. But if we want to get the economic recovery plan, we need to use the reserves of the high command, but it is for investment purposes”, – he added.
Finally, given the fact that the burden falls on the regions, it is necessary, according to Klepach, “to take serious measures to change the nature of economic relations between the Federal center and the regions, we must give them resources.” Because the current model does not allow to reduce the differentiation between regions and to create a new growth point.
It is necessary to use, in priority order, NWF, money emission, foreign borrowing, said head of the laboratory for financial studies Institute for economic policy. Gaidar Alexey Vedev (previously worked in the Ministry of economic development).
However, he noted that unlike previous years now the rhetoric of the financial sector has changed markedly: “the Finance Ministry is not insisting on the budget surplus. This means that it will give more economy, than to take. Discusses the increase in domestic and foreign debt, introduced tax incentives. I find it extremely stimulating fiscal policy to be saved in the coming years, not only at the exit of the pandemic.”
“Monetary policy also seeks to offset. I think you can neutral real interest rate from 2-3% to reduce, even to zero”, – he added.
Experts have expressed concerns that when dominated by state-owned banks, are prerequisites for transfer of a sector of its problems and obligations on the state. “This situation is dangerous from the point of view of the future of the banking system, which should promote economic growth, and not to obtain record profits,” – said Vedev.
It was proposed more radical measures. Director of the Moscow school of Economics of Moscow state University. Lomonosov Alexander Nekipelov has mentioned not only the setting of key interest rates at 2-3%, increase in money supply, but also the initiation of government of major infrastructure projects (the second Transsiberian) based on a public-private partnership, introduction of a Tobin tax (on currency speculation).
Materials Robert Nigmatulin mentioned measures such as the depreciation of the ruble up to 80 rubles per dollar, tighter controls and increased taxation of cross-border movement of capital (including offshore), the call for voluntary implementation on a 4-month period of progressive taxation on the European scale of the income (40%) in favor of NWF, etc. were Also mentioned a significant increase in the funding of health care.
“We need fundamental changes in our economic order plus the change of personnel policy”, – said Nigmatullin.
As explained Klepach, the pandemic crisis raises the question not only on economic decisions but also on measures to strengthen the socio-political trust. This appears to be I might add most importantly – a new growth model, which we are so generously to Finance, should create the new restraints, and removal of barriers to the free development of new centres of profit and accumulation of capital.