Image copyright RIA Novosti A number of leading Russian economists, including the Commissioner for Human businessmen Boris Titov, presidential adviser Sergei Glazyev and chief economist of “Vnesheconombank” Andrei Klepach, developed a plan for large-scale economic reforms which, in fact, amount to a radical change of course of the country.
The program was written in the “Stolypin club” – a discussion platform the country’s largest business association “Business Russia”. Offers economists will be discussed at a meeting of the club on Wednesday.
In the case of compliance with the prescriptions without whatsoever sample seizures authors of the document (the squeeze is at the disposal Bi-bi-si) promise to yield Russia the pace of GDP growth to 10% a year – despite the fact that this year is expected to fall to 3,9%.
To achieve this is expected in a few steps.
At first the government should start building up money supply that is to include the printing press and give the money to specific development projects. At the same time, it is proposed to accept the “shock package of tax incentives”.
In the second phase is planned to bring the tax system into line with the standards of developed countries, and for this to reduce the tax burden on businesses from the current 49% to average strap 41 %. Make this document’s authors want at the expense of insurance payments, income taxes – and the simultaneous increase fees on companies mining sector.
In addition, the outlines measures of “soft” currency regulation, land, judicial and partly pension reform. To coordinate all these innovations are proposed Center for Development Management, reporting to the president.
So far the government to the idea of target monetary issue is treated with undisguised irritation.
Plan: diagnostic part
This economic program is remarkable in the same extent, and its team of authors, representing a wide spectrum of Russian economic thought. In one team turned Andrei Klepach, who worked in the leadership of Ministry of Economic Development until the summer of last year, and long-time critic of the government and the Central Bank Sergei Glazyev, stating the need to “de-dollarization of the economy” and of getting rid of financial dependence on the West.
The introductory part document drawn socio-economic context of Russia at the present stage, explaining the need for immediate reform.
- The country is becoming less Entrepreneurs : According to the Federal Tax Service of January 1, 2015 in Russia were registered 3.55 million individual entrepreneurs, which is 13.6% less than in 2012 . Medium business is less than a quarter of the economy and the employment it has decreased in 2011-2013 to 16,8%.
- The share of the primary sector in GDP the country is on the “historical maximum” marks . According to the Federal State Statistics Service, in 2014 42% of Russian exports (total exports – $ 500 billion) were crude oil and natural gas. The average profitability of the economy – 3.5% and in the mining sector – 14%. As a result, more than 60% of investments were made in the production and export of raw materials and not in the technology sector and small and medium businesses.
- The public sector crowds out private Business . So, in 2006 in the top 400 Russian companies’ share of state-owned enterprises accounted for 41%, and in 2012 – already 50%.
- The shadow economy continues its expansion . According to opinion poll conducted in March 2015, to 28% of employees of Russian companies report that they receive the salary or its part in envelope. According to the Ministry of Labor and Social Protection, 20% of the economically active population (22.5 million) are not registered in the social security system and do not pay contributions to the Pension Fund. Nearly half of all foreign investment in Russia is made of offshore companies: this means that a considerable part of Russian businessmen prefer to work through a foreign jurisdiction, or thus optimizing taxes, or fear of “spin” the business.
- Entrepreneurs do not believe that the state is ready to defend them . According to the survey of 2015, 59% said business in the country unsafe. This perception rating of corruption is increasing: 38.1% of respondents in the survey in 2015 stated that the level of corruption in Russia in recent years has increased. 69% believes that the anti-corruption law enforcement is ineffective.
The efforts of the Agency for Strategic Initiatives, “Business Russia” and other business associations, aimed at improving the business climate – postulate the authors of the report – encounter “antiresheniya” the government and the Central Bank. To reverse the situation, offered as much to upgrade economic policies and to embark on the following tasks.
prescription of the Finance
Healing the economy should begin to change the priorities of the Central Bank. Who is the main function of the Bank of Russia in accordance with the Constitution, is to protect and ensure the stability of the ruble. Judging by the fluctuations of the national currency, with the execution of its primary tasks of the Central Bank copes very conditional – although President Vladimir Putin and takes a different view.
Central Bank finally moved to a policy in which attempts to influence the exchange rate through the so- called inflation targeting: that is, the central bank, in accordance with standards established by the IMF, said that it is enough to control inflation and the exchange rate itself will find the right balance. However the crisis, which entered the country, prevents this, or to find the balance needed more time, but as long as Russia does not get any control inflation (expected to 12.2% for the year), or “ustakanilos” course.
According to the authors of the document – and here was influenced by the ideas of presidential adviser Sergei Glazyev – The Bank of Russia should stop thinking only about inflation and the exchange rate: its main priority must be economic growth (currently within the competence of the government, but not the Central Bank ).
Run the growth proposed measures opposing those currently provides the main bank of the country. It holds key rate high (11.5% per annum) and holds the money supply in order to limit inflation. In contrast, according to the report, the Central Bank must make loans available, but do not squeeze the money supply, and increasing. In China, indicators of money supply (referred to as M2) is 195% of GDP, in Russia – 45% of GDP.
“CBR can gradually increase the money supply (at least to the level of M2 / GDP = 80 -90%) without fear of a significant increase in inflation, but at the same hard condition: the funds earmarked should be aimed at stimulating investment in real production, “- said in the program.
In one package with these quantitative mitigation is proposed to introduce selective exchange controls, including the tax on the purchase of foreign currency corporate sector.
In addition, payments to the budget for export should act directly in foreign currency, so that every time during the tax period happened artificial distortion rate rubles (when buying rubles companies for tax deductions exchange rate of the Russian currency is growing).
prescription part: continuing
A list of changes that the authors of the document propose to implement, extremely wide. Below – the main directions of reform.
- In the first stage (2016) – to take the shock package of tax incentives to encourage investment and technological innovation.
- In the second phase (2017-2019 years) – to bring the structure of taxes in accordance with the level of developed and rapidly developing countries: in particular, return the canceled 2010 , the unified social tax base and reduce the single social tax rate due to the abolition of funded pension, making it simultaneously with the introduction of tax incentives for private pension savings. Go to the progressive scale of personal income tax. Enter “offshore” factor for companies with offshore owners for income tax, real estate, property, land.
- As part of land reform to stop the explosive growth of the cadastral value of land and property by the introduction of a limit on its growth in three years.
- Radically (at least twice) to reduce the number of inspections of business and increase the effectiveness of compliance and enforcement.
- Make a court independent and effective for business.
plan: Criticism
The provisions of this policy document in largely not new, the important thing is that for the first time during the current economic crisis in the country, the expert community is formulated as a comprehensive plan – and formulated at the representative level.
Earlier, a number of the ideas contained in the plan have already gained fame and actively discussed by analysts. The biggest response was the proposal of the Presidential Adviser Sergei Glazyev of individual measures on foreign exchange regulation, as well as quantitative easing with the aim of launching the investment process.
I lived in the USSR, I do not like then. Although there were a lot of good, but in terms of economic freedom I do not like the one offered by Sergei Glazyev
So, Chairman Supervisory Board of the Institute of Demography, Migration and Regional Development Yuri Krupnov said in September that in the context of de-industrialization and the fall of technological sovereignty of the country simply give money to businesses will not be enough.
“The availability of credit will not provide companies new markets. More than confident If you, Sergey, to put the chairman of the Central Bank, in a year or it will be a catastrophe, or you will do the same, Ms. Nabiullina [Central Bank Chairman], “- said the scientist at the Moscow Economic Forum, referring to Glazyev.
Deputy Finance Minister Sergei Storchak also questioned the value proposition adviser to the president.
“I lived in a socialist economy, is enough for me. If someone wants to come back – without me. I lived in the USSR, I do not like then. Although there were a lot of good, but in terms of economic freedom I do not like the one offered by Sergey [eyes] “, – he said the deputy head of the Ministry of Finance in an interview,” Russian news service “September 8.
However, he added, I did not see personally the specific predllozheny Glazyev, and judges are only reported to journalists.
Finally, in the correspondence polemic with the idea of the need for quantitative easing and joined Russian Prime Minister Dmitry Medvedev said in an article published in September.
“Freedom of uncontrolled emission of money – one of the most dangerous freedoms. Links to the western experience to stimulate emission untenable. Firstly, it is carried out in conditions of deflation (directly opposite ours). Secondly, the results confirm the high efficiency of the mechanism. And, thirdly, these measures have already become a problem, the prospects for the solution of which are unknown (remember the apocalyptic predictions about the fate of the US dollar) “, – convinced the head of government.
According to the statements made by President Vladimir Putin, it is the ideas of increasing the money supply and other recipes that do not fit into the idea of rather tight monetary policy, wary. At the last October 13 at Moscow investment forum “Russia Calling!” the president confirmed that trusts the government and its efforts to overcome the crisis in the economy.
“Despite all the difficulties and challenges that the Russian economy has faced, our management team in the economy has shown a high level of responsibility, consistency and the ability to achieve results”, – Putin said.
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