Rus­sian par­lia­ment okays draft aus­ter­ity bud­get

Kuwait Times - - BUSINESS -

MOSCOW: Rus­sia’s par­lia­ment on Fri­day ap­proved a first read­ing of a bud­get that would cut spend­ing in key sec­tors, a move that has sparked fears it could crip­ple the nascent re­cov­ery.

The 2017-2019 bud­get was ap­proved by a 334-to-100 vote in the State Duma. It must pass two more read­ings be­fore it can be ap­proved by the se­nate and Pres­i­dent Vladimir Putin.

Putin-who be­came pres­i­dent less than two years af­ter the coun­try de­faulted on its for­eign debt in 1998 — has pledged to keep the coun­try’s fi­nances un­der con­trol de­spite a sharp drop in en­ergy prices. The draft bud­get aims to re­duce the deficit to 3.2 per­cent of the GDP next year, be­fore re­duc­ing it to 2.2 per­cent in 2018 and 1.2 per­cent in 2019.

But re­duc­ing the deficit comes at a high price that in­cludes sig­nif­i­cant cuts in a wide ar­ray of sec­tors rang­ing from ed­u­ca­tion to mil­i­tary spend­ing. Econ­o­mists now fear that spend­ing cuts could hin­der Rus­sia’s ef­forts to pull it­self out of a two-year re­ces­sion caused by West­ern sanc­tions and de­pressed en­ergy prices. Rus­sia’s Cham­ber of Com­merce and In­dus­try said that the draft bud­get rep­re­sents a “risk for growth prospects”, while the Union of In­dus­tri­al­ists and En­trepreneurs said it was a “sta­bil­i­sa­tion and stag­na­tion” bud­get rather than one fo­cussed on growth.

The Duma’s Com­mu­nist and na­tion­al­ist fac­tions also slammed the draft bud­get, with long-time Com­mu­nist party leader Gen­nady Zyuganov telling Rus­sian media that it was “anti-so­cial” and would “in­evitably lead to a po­lit­i­cal cri­sis”. Fi­nance Min­is­ter An­ton Silu­anov mean­while de­fended the bud­get’s aus­ter­ity, say­ing it was a “con­di­tion to guar­an­tee solid growth.” —AFP

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