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Medvedev says budget deficit will be reigned in as soon as possible
Published: 12 October, 2009, 12:19
Edited: 15 October, 2009, 07:02
TAGS: Markets, Crisis, Budget, Economy
Russian President, Dmitry Medvedev, calls for the economy to move from energy reliance in just over a decade and emphasizes that moves to address the economic downturn should limit Russia’s long term plans.
Speaking about the more immediate economic concerns, the Russian president indicated the economic downturn in the wake of the global credit crunch had hit harder than expected and that this in turn had pounded the Russian currency – the Rouble – and meant that the country is now heading for budget deficit.
But he indicated that the economy would begin to turn, and that the Rouble had already stabilized. He also said that a budget deficit would be serviceable and that he was looking to reign it in as soon as possible.
“The real damage to our economy was far greater than anything predicted by ourselves, the World Bank and other expert organizations. In the beginning there was talk of seeing the economy drop by 3 or 3.5%, but this year we are expecting to see the GDP decline by 7.5%.
The national currency situation was also quite difficult. At the beginning of the year the Rouble became significantly weaker. This was an unavoidable move, which occurred in an orderly way. We didn’t allow for abrupt, intermittent changes in our exchange rate. Nethertheless, nobody was happy about the weakening of the Rouble, because it painfully hurt people’s incomes. Currently the situation with the Russia’s currency market and the Rouble is entirely calm and stable.
It’s true that we now have a very tight budget, which used to be deficit – free or, as economists say, we had a budget surplus, because Revenues exceeded expenses. Now we have a budget deficit, and next year it will be quite significant. Nevertheless, we are perfectly capable of functioning with this deficit and servicing it. This is not a tragedy not a catastrophe for the economy – it simply means that we have to work really hard to improve.
Our goal is to achieve a balanced budget or a budget with a minimal deficit within a year. And all the government's efforts and decisions should be directed to this end.
But overall stability, macroeconomic stability, fiscal stability – all these will of course be maintained. There should be no doubt whatsoever about this. We are obliged to make all our payments as they come due: social payments, those associated with the financing of major industrial and economic programmes, payments to the military, and our international obligations."
10.10.2009, 08:34
1 comment
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This is a wise move by president Medvedev. All countries should commit to a goal of reigning in their budget, especially the U. S. A. WE SHOULD ALL LIVE WITHIN OUR MEANS. The world financial mess was caused by people wastefully spending and buying things that couldn't afford along with incompetent monetary policies by major countries, etc.
Dmitry Medvedev, President of the Russian Federation, in a recent article he has called for Russia to become an "active and respected member of the world community of free nations." This cannot happen until the Russian government faces up to its obligations as per the successor government doctrine of settled international law, whereby the present internationally recognized Russian government must recognize and honor the contractual financial obligations undertaken by its predecessor internationally recognized governments. Prior to 1917 Russia issued more than 16 billion gold francs in government–guaranteed bonds to finance 6.500 km of railway tracks, the electrification grids of St.- Petersburg, Moscow, Tiflis, Odessa, and even, in 1906-07, 320 million gold francs as aid to suffering populations as a result of poor harvest, as well as many more investments . I am offering the opportunity of proving that beyond speech Russia intends to act in order to reclaim respect from the world community of free nations. By officially recognizing the validity of these bona fide claims and opening talks to settle them, Russia could legitimately aspire to gain investor confidence, at a particularly important moment since the president plans to resort to international capital markets in the near future.