2017-2019 budget – anti-risk and socially oriented

As of December 19th, 2016 the budget for 2017-2019 became a federal law under number 415-FL named “On the federal budget for 2017 and for a planning period 2018 and 2019”. The budget is made up on the basis of conservative prediction, in particular: assuming average free market oil price amounting to USD 40; annual average dollar rate amounting to RUB 67,5 per USD 1; inflation rate amounting to less than 4% at year-end.

The major part of income will be created by non-oil and gas income - 62,6%. It will be driven by increase of underlying tax receipts: value-added tax, income tax, excise duties. Decrease of federal budget oil and gas income from 37,4% in 2017 to 36% in 2019 is expected. Government domestic loans of the RF will be the main source of financing the federal budget deficit. During 2017-2019 the volume of the government debt will remain on the safe level equaling to less than 20%. Main characteristics of the budget for 2017-2019 are represented in the table 1.

In 2017 the main expense items will be social policy – 5,08 trillion RUB, national economics — 2,292 trillion RUB, safety and law enforcement activities — 1,27 trillion RUB, federal issues - 1,135 trillion RUB, national security — 1,121 trillion RUB. The rest expenses are allocated as follows: inter-budget transfers - 783,5 billion RUB, government debt management — 729 billion RUB, education — 568 billion RUB, health care service — 377 billion RUB, culture and cinema art — 94 billion RUB, sport — 89,7 billion RUB, environment conservation — 76,4 billion RUB, mass media — 73,4 billion RUB, housing and public services — 58,2 billion RUB.

The budget for 2017-2019 is enacted; however the country needs aggressive priming of domestic economy growth. Therefore it is necessary to start preparing a plan of its reconstruction and reorganization. The successful result will appear in case of availability of loans, strong tax incentives, investment growth, including using budget funds, defeating nonmonetary inflation, related in the first place to growth of monopoly prices and rates, regulated by the government etc. At the moment for example such conditions are created in the agricultural sector, as a result the success on the rate of no less than 4% is expected at year-end 2016.

The experts predict slight or zero growth in the absence of serious changes. The big growth will be possible when increasing the number of average free market oil prices. The case when the cold snap in the economy will take place is regarded the worst. In its terms the system risks, prices, inflation, ruble will run out of control. It will lead to dollar strengthening, declining oil and gas prices, financial shocks, passing in form of chain reaction from one country to another.