Russian economy in “full-blown crisis” – ex-finance minister

Alexei Kudrin file photo

(RIA Novosti – June 3, 2015)

Speaking at the Russian Federation Council in Moscow, ex-Finance Minister Aleksey Kudrin has once again criticized overblown defence spending that squeezes the funds out of other areas of Russia’s economy.

A large part of the budget deficit that the country is faced with today comes “not from decreased government earning but from the need to support defence expenditure”, Kudrin said, RIA Novosti (part of the state-owned International News Agency Rossiya Segodnya) reported on 3 June.

“This year, despite shortages of financing in some other areas, government spending on defence will grow by R600bn [over 110m dollars at the current exchange rate],” he said.

In 2011 Kudrin was sacked after he had openly disagreed on the level of defence spending with then-President Dmitriy Medvedev.

While the government does not plan to decrease budget spending on arms and armament, Kudrin was pessimistic on Russia’s GDP growth, which he put below official estimates.

“We are currently faced with a full-blown crisis under any existing criteria. The Economic Development Ministry estimates Russia’s GDP will sink by 2.8 percent this year, which already means a recession. But my thought is that the drop will be sharper, by about 4 per cent,” Kudrin said, according to a separate report published by RIA Novosti the same day.

According to a report by privately-owned Russian news agency Interfax that day, the ex-minister expected zero-level economic growth in 2016, followed by a slow pick-up of about 1.5 per cent until 2018.