(RIA Novosti – MOSCOW, April 4, 2013) The Russian authorities are dodging vital but unpopular measures and structural reforms necessary to spur Russia’s faltering economic growth, former Finance Minister Alexei Kudrin said on Thursday.
“The government is making use of measures other than those necessary while being afraid of real measures because they are not always popular,” said Kudrin, who is no longer in government but heads his Civic Initiatives Committee, a policy think-tank.
Kudrin was fired as finance minister and deputy prime minister in 2011 following a public row with then-President Dmitry Medvedev over budget issues, particularly rising defense spending. Since leaving government and setting up his think-tank, he has repeatedly weighed in over fiscal policy.
Russia’s GDP grew by a mere 0.9 percent in January-February 2013 compared with last year’s growth of 4.3 percent in the same period, while in February growth rates dropped to 0.1 percent. Russia’s Economics Ministry said in March first-quarter growth would be below its previously projected figure, while its capital flight forecast would have to be revised from $0-10 billion to $30 billion in 2013.
Kudrin said these macroeconomic indices, which were related to the unfolding banking crisis in Cyprus, were another addition to the overall negative outlook for the country.
“In general, the country [Russia] is not implementing structural reforms, the economic machine is stalling and the delay [in reforms] is already in years,” he said.
Russia must cut its enormous social spending and increase the pension age, no matter how unpopular these measures may be, he said.
“The issue is worth hundreds of billions and trillions [of rubles] which will be eaten away instead of being spent on building roads,” he said.
The Russian government should also cut its enormous defense spending, Kudrin said.
“Last year, the total spend on the army and law-enforcement bodies increased by more than 700 billion rubles [$23 billion] and this year it is planned to grow by another 700 billion rubles,” Kudrin said.
This is the money which the government could not find to build roads, but has spent on the forces, he said.
“This money has not been spent in a way that would lead to economic growth. I warned that this spending is ineffective,” he said.