Achieving balanced budget at cost of its quality unacceptable – PM

MOSCOW. Sept 24 (Interfax) – Russian Prime Minister Dmitry Medvedev believes that the structure and effectiveness of budget expenditures are no less important than balancing the budget.

“The creation of comfortable conditions begins with ensuring macroeconomic stability. Low inflation and a balanced budget remain priorities for the country’s sustainable development. Inflation must be reduced to the level of 4% in the next three years. This is also an important condition for the growth of the prosperity of citizens, and ensuring the affordability of loans for businesses, and for a more predictable economic life in general,” Medvedev wrote in an article published by Rossiyskaya Gazeta. The complete version of the article will be published in the journal Voprosy Ekonomiki.

He said “it is also necessary to preserve the two most important macroeconomic achievements of the past 15 years – a balanced budget and low state debt.”

“And this should not only refer to the federal budget, but also regional budgets, which are currently feeling debt burdens,” Medvedev said.

“The structure of budget expenditures and their effectiveness are no less important than balancing the budget. First of all, clearer priorities are needed in spending funds in terms of their impact on long-term economic growth. Research and the experience of many countries show that the priorities here are investments in people, including healthcare, education, science, as well as in infrastructure,” Medvedev said.

He noted that budget constraints do not make it possible to pursue these priorities to a sufficient degree at present. “But this does not make them less important. Therefore, achieving a balanced budget at the price of a significant deterioration in its quality must be considered unacceptable. Secondly, the generally old problem of increasing the effectiveness of budget expenditures has become even more relevant today,” the prime minister said.

He also noted that “in conditions of stalling economic growth, budget problems also cannot be resolved by raising the fiscal burden.”

“A decision has been made that taxes will not change upward in the next few years (downward, granted selectively, it is possible that this is already happening or being discussed). In addition, we should currently forego growth of fiscal levies of a nontax nature,” Medvedev said.