“Russia has already adapted”: Finance Minister Anton Siluanov on the situation in the economy and budget revenues of the Russian Federation

- Anton Germanovich, I would like to start with a rather general, but still important question: how, under all current conditions, did you manage to keep the Russian economy from a serious fall in 2022?

— Indeed, last year was not easy for the economy of our country.

Many analysts assessed the impact of restrictions and sanctions in different ways.

Nevertheless, the measures taken by the state disappointed those who predicted double-digit GDP decline rates, high inflation and a sharp decline in citizens' incomes.

The economy shrank by just 2.1% last year.

This is even significantly less than in the pandemic 2020, when there was a decrease of 2.7%.

Inflation was kept under control: by the end of the year it was slightly less than 12%.

In turn, the real disposable income of the population decreased by about 1%, but already in the fourth quarter of 2022, we saw their positive dynamics.

These results were achieved largely due to the fact that in recent years we have pursued a responsible macroeconomic policy.

First of all financial and budgetary.

We had a prudent policy in the field of spending and budget deficit - thanks to the operation of the budget rule.

Russia also has a low public debt, which at the beginning of this year amounted to 15.1% of GDP.

This is our advantage, which gives us the opportunity to maneuver in terms of operations in the financial market and allows us to attract loans to cover budget expenses in the future.

We have created an independent system of financial transactions and the functioning of the financial market as a whole.

I am referring to the emergence of MIR payment cards, which are now accepted not only in Russia, but also in a number of other countries, despite all the restrictions.

• Anton Siluanov - on the key factors of Russia's financial stability

In addition, we now have our own financial messaging system created by the Central Bank.

Therefore, all the decisions of the West to disconnect Russian banks from the international SWIFT platform, as well as the Visa and Mastercard systems, had absolutely no effect on our internal operations and payments.

Of course, the stability of the macroeconomic situation was also affected by the fact that we have a system of floating exchange rates and inflation targeting.

All this as a whole created the basis for financial stability.

In addition, of course, one cannot fail to mention the measures taken last year to support citizens, primarily the poor and families with children.

For example, we introduced the system of a unified universal child allowance ahead of schedule, and thus helped parents with children under 17 - they received the necessary assistance from the state.

We also raised pensions and the cost of living.

All this made it possible to minimize the financial consequences of high inflation that the country faced in the first half of last year.

In addition, we have helped industry and business.

We are talking about supporting both small businesses and a wide range of entrepreneurs.

This includes subsidizing interest rates when interest rates on loans in the economy grew, and deferral of insurance premiums totaling about 1 trillion rubles, and loans under state guarantees, and the development of mortgage programs.

Even during the covid period, we learned how to respond to such difficult situations for the economy.

Therefore, now we already understand how to help people overcome such difficult times.

All this ultimately affected the economic dynamics.

We hope that the measures that were taken in 2022 and are being taken now will make it possible to finally stabilize the macroeconomic and financial situation this year.

We see that so far everything is going according to plan.

- Although the situation in the economy today is better than many experts initially assumed, the negative impact of sanctions is still obvious.

How critical were external restrictions?

Of course, sanctions are harmful.

Moreover, they harm not only Russia, but also those who introduce these restrictions, as well as world trade in general.

First of all, we felt the freezing of our external assets.

These are gold and foreign exchange reserves, and business funds that fell under sanctions.

By such actions, the West has reduced the credibility of its system of payments.

The damage has also been done to logistics, especially in terms of the costs of our exporters.

Restrictions have been introduced on the import of products we need.

The principles of open world trade have been seriously affected, and the consequences of this will be observed for years to come.

Nevertheless, Russia has already adapted to a number of these restrictions.

Despite bans on the export of our raw and non-commodity products, we have found new markets.

If, for example, we look at the volume of our hydrocarbon production over the past year, it has not only not decreased, but even increased.

We hope that this situation will continue this year.

In general, we have reoriented from the West to the East, and not only in terms of exports, but also imports.

At the same time, Western restrictions have led to the fact that the same energy carriers in the countries that have imposed these sanctions have risen in price. 

• Anton Siluanov on the consequences of anti-Russian sanctions in the West

In addition, these states have suffered from their own restrictions on the supply of products to Russia.

A number of foreign companies that previously worked with us and imported their goods to the Russian Federation are now forced to cut production and lay off employees.

A simple thesis follows from this - when introducing restrictions, it is impossible not to feel them on yourself.

We, on the other hand, do not despair at all.

Russia is already learning and working in the new conditions.

Moreover, in response to new challenges, we began to actively invest in our own competencies, which we previously acquired abroad.

This is electronics, and aircraft building, and automotive, and mechanical engineering.

That is, all those critical technologies in which we focused on our Western partners.

Now there is no such trust in the West, which means that we need to develop it ourselves.

We have already gone through all this.

For example, until 2014, the shelves of our stores were mainly imported food products, and now ours.

The same will happen with manufactured goods.

It just takes more time to do so.

We have no doubt that we will be able to develop such competencies and be self-sufficient in critical technologies on which the technological security of our country depends.

- Western media in their materials say that Russia has significantly increased the volume of investments, although initially the expectations were exactly the opposite.

Where did the funds come from?

— As I said, we started to develop our own competencies.

The budget and our state-owned companies practically did not change their production and investment plans last year.

We almost did not cut infrastructure investment programs.

In addition, the state, through various measures, supported the desire of business to invest in every possible way.

In addition, the volume of savings in the economy increased over the past year, and the authorities began to channel this money into investment projects.

In particular, we began to actively use funds from the National Wealth Fund for infrastructure projects.

In fact, the work that was being prepared in previous years began in 2022 and will continue in 2023.

We have not slowed down our measures to support and stimulate the economy, and they have paid off.

“The West, meanwhile, continues to impose more and more new sanctions against Russia and will probably continue to do so in the future.

What are the plans of the ministry for the future to secure the country financially?

“We must build a system so that no sanctions and other external influences from unfriendly countries affect our plans.

First of all, we are talking about budget plans and production projects of the business.

This is our task, and in order to achieve it, we need to ensure financial stability and independence.

We must conduct budgetary policy in such a way as to have a margin of safety and respond to external challenges while maintaining a budgetary balance.

That is, on the one hand, we should be able to finance all our social and infrastructure programs, and on the other hand, general macroeconomic stability should not be violated.

• Anton Siluanov on a balanced budget

According to our plans, already in 2025 we will reach a balanced budget.

That is, the budget will be balanced at the primary level (excluding interest expenses) - expenses will be equal to income.

This is very important in terms of ensuring macroeconomic stability and fulfilling all our obligations, primarily to citizens.

Moreover, if we look at what is being done in the countries that are adopting sanctions, they are very far from such budgetary parameters as we have.

— The current state of the Russian budget has recently become one of the most discussed topics in the expert community.

In January, the budget deficit amounted to 1.76 trillion rubles and exceeded half of the amount budgeted for the whole of 2023.

Moreover, there are estimates by a number of analysts that in February the deficit grew to 4 trillion rubles.

What is the reason for such dynamics, and how is it planned to return to the target level of 2.93 trillion?

- Many analysts and experts say that there is no money in the budget and the deficit exceeds the planned figures.

However, for some reason, these specialists do not want to hear the reasons for the situation that developed in January and early February.

These reasons are very simple.

In 2022, we adopted a number of legislative initiatives to help businesses so that companies have more opportunities to use their own working capital.

I mean early VAT refund.

In January 2023, we refunded VAT on a one-time basis for the fourth quarter of 2022.

This was not the case at other times last year because VAT was refunded gradually over the course of the quarter.

We went for an accelerated return on profit.

A new system was introduced for the single payment of tax payments.

The business now has one payment for the payment of all taxes, and this is less administration and accounting.

There is one day in the month when this tax is paid - the 28th day.

Therefore, within a month, enterprises accumulate resources that were previously paid to the budget, and now they have the right to dispose of them.

In addition, advance financing for a number of budget expenditures has increased.

This is correct, since earlier we spent most of our expenses in December, but now there are advances, and this money works in the economy.

According to the results of February - this information has not yet been heard anywhere - we see that in January-February 2023, more revenues were received by the budgets of the budget system than in January-February 2022, despite the fact that our plans for the year as a whole were more modest.

In the near future we will publish these statistics, and I think that those who predicted a big imbalance for us will be very upset.

— How are the negotiations with big business progressing regarding a one-time contribution to the budget?

— We have an initiative of the Ministry of Finance to attract additional sources of income to the budget.

At the same time, in our proposals we proceeded from the principle of justice.

What is the meaning of our proposals?

It is as follows: over the past few years, we have seen a fairly high level of opportunistic income for entire business lines.

The state offered these companies to transfer part of the rental and market excess profits to the budget in the form of taxes.

At the same time, we proposed to take the increase in business income for the period 2021-2022 and correlate this amount with the period 2018-2019, bypassing the covid 2020, because it was irrelevant.

We proposed to partially centralize the difference between the volumes of revenues in the budget for state needs.

• Anton Siluanov - on the contribution of big business to the budget

We are grateful to the business, our proposals were heard.

We discussed this with entrepreneurs, agreed on the details, and in the near future we will be ready to come up with a legislative initiative in parliament so that this idea can be implemented this year.

We estimate that about 300 billion rubles will be additionally attracted to the budget.

On the one hand, this is not much money, since our budget revenues amount to 26 trillion rubles.

On the other hand, this is a fairly significant amount to finance the programs that we are conducting and will continue to carry out to support people and infrastructure plans.

- Given all the current circumstances, is it a difficult time to be the Minister of Finance or, on the contrary, is it interesting?

- It is not easy to work in any state position in the government.

Therefore, the challenges we face encourage us to develop more non-standard creative solutions.

And during this period, of course, more drive.

So we work with a spark.