MOSCOW (Reuters) - Russian President Vladimir Putin called on Monday for his government to draw up a package of measures to boost economic growth, while warning against changes to the country’s recently adopted fiscal rule.
“We need to do everything necessary to secure stable and steady development of the Russian economy. To take a range of measures for stimulating economic growth,” Putin said at a meeting with senior government officials to discuss economic policy, in the resort city of Sochi.
Russia’s economy expanded by 1.1 percent year-on-year in the first quarter, barely half the growth rate seen in the final quarter of last year, as it was hit by slower investment and exports and weaker consumption. With prices of commodities - Russia’s chief export - falling, some senior officials have warned the country could slide into recession.
The Economy Ministry this month cut its forecast for economic growth this year to 2.4 percent, from 3.6 percent.
Putin said that while many were proposing using budgetary measures as a way to boost growth, this would require amending Russia’s recently adopted fiscal rule, which he warned would be risky for the economy.
“It’s obvious that for solving the given task not only budgetary measures are necessary,” he said.
The fiscal rule limits the government’s ability to boost spending by tying expenditure to the long-run average oil price.
Putin called on the government to propose a mechanism for using oil revenues accumulated in the government’s National Welfare Fund as a way to boost infrastructure investments.
The $87-billion National Welfare Fund is the larger of two sovereign wealth funds in which the government accumulates revenues from oil taxes. It was set up to support the long-term stability of the pension system, and is presently mostly invested abroad in bonds of Western governments.
Finance Minister Anton Siluanov said last week that he saw the country’s budget deficit at 0.6 percent of gross domestic product this year, lower than a previously projected 0.8 percent, but warned that non-oil revenues might fall.
Reporting Darya Korsunskaya; writing by Jason Bush; Editing by Lidia Kelly and Susan Fenton