FBK Economic Club Experts Discuss the Cost of Election Promises

Participants of the FBK Economic Club Meeting discussed the potential cost of election promises given by those who run for presidency in Russia.  Invitations to take part in the discussion were sent to presidential candidates. Leader of the Yabloko party Grigory Yavlinsky accepted an invitation, while other election teams were represented by economists who had prepared election programmes. 

In his opening speech Igor Nikolaev, Director of FBK Strategic Analysis Institute, said that all election promises reflected in programmes had their cost. For example, the promise to abandon VAT had a price of 2.7 trillion rubles. That was the size of a potential hole in the budget. “And candidates do not always answer the question where the money will come from. We analysed economic programmes of candidates in 2012 and this year. To be fair, this year’s programmes are much more elaborated than the previous ones. Today we actually have something to choose from,” he said.

At the same time Grigory Yavlinsky believes that without political changes a programme, even the most proper one, will not work. In his opinion, predictability is needed above all to ensure economic growth. Established rules of the game should be observed. It is necessary to understand who will solve economic disputes and, most importantly, how and to which extent the government can interfere. “It is also important how we will interact with the rest of the world. Today due to sanctions Russia is losing over three trillion rubles,” the presidential candidate said. Sergei Ivanenko, First Vice-Chairman of the Yabloko party, added that extreme social inequality was also a problem.

Andrey Nechayev, an economist and Former Minister of Economy of Russia, is also sure that any economic rehabilitation initiatives will not work unless citizens take control over the government. It is necessary to normalize both international relations and domestic business environment.  “First of all, we need real private property security. This will require a thorough judicial reform,” he said.

Yakov Mirkin, Head of the Department of International Capital Markets at the Institute of World Economy and International Relations of the Russian Academy of Sciences, even tried to determine the formula for stimulation of economic growth in Russia. “We only need affordable loans, moderately weak ruble exchange rate, reduced tax burden, public funding of investments and advanced market environment. There are different instruments for each block which can be disputed but on the whole the scheme is beneficial for everybody,” says Yakov Mirkin. 

Economist Vladimir Milov said that the Russian model of state monopoly capitalism was currently bankrupt. All its flaws, such as imperfect courts and other state institutions, aggressive foreign policy and hyper-centralisation of all resources in Moscow, resulted from the state monopoly demand and had specific economic interest. “That is why it is necessary to build highly competitive economy of another type. Independent from the government which should be limited to a compact infrastructure providing healthcare, education and security,” he said.

FBK Economic Club is a unique discussion platform where journalists can meet well-known economists, politicians and public officials in order to discuss a wide variety of economic issues.