Russian budget spending soars 50% in three years, cannot grow further, must be prioritized -Siluanov

ST. PETERSBURG. June 16 (Interfax) - Funding for Russia's new priorities must be found within the existing budget, as there is no more room to increase spending, taxes or the deficit, Finance Minister Anton Siluanov said.

The issue of increasing spending was raised at the Sberbank business breakfast at the St. Petersburg International Economic Forum during a discussion about whether businesses face tax hikes in the next few years.

"Will there be an increase in expenditures?" Siluanov said in response to a question from Sberbank head Herman Gref about the possibility of tax increases. "It seems so, yes," Gref responded.

"Then we need to understand who will pay for them. If we want more spending, then we need to understand where the money will come from. Money doesn't come out of thin air, after all. Either we increase the deficit and, accordingly, inflation and interest rates, [in which case] households and businesses will pay for this. Or we raise taxes, which will also be paid for - I don't know what taxes, one or the other," Siluanov said.

Another, better option is to prioritize existing expenditures, he said. "Or we ultimately take our additional expenditures out of the current budget pie, and do it so that the spending we have today we either postpone until later or defer," Siluanov said.

"This is the most right [thing to do], but it's the most difficult. This is least doable, as experience shows, unfortunately. But this is what we need to do," Siluanov said.

He recalled that federal budget spending surged by 50% in the period from 2019 to 2022, from 18 trillion to 29 trillion rubles. "Whereto further, it's already simply impossible. The best answer is to get inside and find expenditures from there," Siluanov said.

The prospect of having to prioritize budget spending was one of the main topics at the St. Petersburg International Economic Forum's morning session on macroeconomics on Thursday. It was mentioned by all four panellists - Finance Minister Anton Siluanov, Economic Development Minister Maxim Reshetnikov, Central Bank chief Elvira Nabiullina and Kremlin aide Maxim Oreshkin.

"We have many such expenses that have not been reviewed in a hundred years. You know, they're already ensconced in our heads, [as if] this is unassailable. Nothing is unassailable right now, everything needs to be reviewed anew now, this is a large resource," Siluanov said at the session.

Later First Deputy Prime Minister Andrei Belousov agreed with the need to prioritize and said experts estimate that budget spending could be optimized by 10%-15%.