Siluanov opposed to deficit budget given significant oil, gas revenue
MOSCOW. April 8 (Interfax) - Russian Finance Minister Anton Siluanov opposes a federal budget that is in deficit at the same time the oil and gas sector is generating significant revenues.
"The country's budget, half of which is oil and gas revenue, cannot have a deficit. Otherwise there are extraordinary risks that the commitments undertaken will not be fulfilled," Siluanov said at an expanded meeting of the Finance Ministry's collegium on Friday.
The demand for financing almost always exceeds the available resource, but passage of unfunded measures, "no matter how useful they may be, will have a negative impact for budget stability," he said.
The approval of rules limiting "excessive budget requests" during drafting of budget spending items was quite timely, he said.
Siluanov cited "lavish budget policy" in Spain, Italy and other eurozone countries as an example. "It must be remembered that this year the eurozone is in recession. A deepening crisis in Spain and Italy cannot be ruled out. The lavish budget policies of those countries have painted them into a corner. The need to cut budget spending will lead to destabilization," he said.
It is fallacious to argue that the budget rules hinder achievement of the strategic goals of the state, he said. "We all must live within our means. The principle of reasonable conservatism is the foundation for effective management of state finances in any country conducting a responsible budget policy," Siluanov said.
He also criticized proposals to use budget money to stimulate the economy. "Of course, the state is a serious source of demand. But what demand is necessary, if it only stimulates imports and price inflation? There is no reason to promote ineffective spending that doesn't boost economic growth," he said.
Russia does not have a problem with demand but with supply. "Development institutions are being developed at great cost, but capital continues to leave the country in significant amounts," he said.
"There is money. We are ready to invest money from the National Welfare Fund and pension accumulations, but investment projects and proposals are needed," he said.