4 Oct 2010 13:28

Cutting budget deficit won

MOSCOW. Oct 4 (Interfax) - Russia should reduce its budget deficit faster than other countries, Deputy Prime Minister and Finance Minister Alexei Kudrin said.

"Russia must quickly reduce its budget deficit. Reducing the deficit won't produce lower growth for us," Kudrin told journalists, recalling that the G20 nations pledged to cut their deficits 50% by 2013 compared with 2009.

"Every country must measure its strengths, there is no simple recipe for everyone. Based on that 50% reduction, a gradual decrease in anti-crisis measures, nonetheless, each country must weight its efforts based on the particulars of its economy, facts, relations with other countries," he said.

Kudrin disagrees with those who say a reduction in deficit spending will lead to a reduction in global economic growth. "It might cause slowing for 12-18 months, but it creates better opportunities for long-term growth," he said.

Kudrin said it is a choice between short-term and long-term effects. "It seems to me that the risks from the long-term effects are greater. If the deficit isn't cut soon enough, we will have different, long-term problems. Therefore, out of all these measures, I believe reducing the deficit is the correct one," he said.

Among the long-term problems that might arise from continued high spending is the artificial maintenance of demand, which disorients business, and maintenance of the overall debt burden.

"In that sense it must be understood which is more dangerous for us. I see the medium- and long-term aspects as being more dangerous. That is, we can fight against it intensively for another two-three years and then fall into stagnation for seven years. That applies to both the U.S. and Russia," he said.

"We must try not to create long-term stagnation as we battle with the crisis today," he said. The support measures must gradually be phased out. "Three years, that is normal," he said.