MOSCOW: Russian Government announced an anti-crisis plan, in which government will cut budget spending for the majority of categories by 10% in 2015. The spending on the plan to 2.332 trillion rubles, including 1 trillion rubles granted to the Deposit Insurance Agency in 2014 to support the banking sector.
The primarily, through elimination of inefficient spending. Along with that its social liabilities will be fully executed, but it will require additional budget spending; spending on defense, agriculture support and fulfillment of Russia’s international liabilities will not be reduced, according to the document.
The government will cut investments in long-term construction projects by 50% and postpone start of all new long-term works to save money for the anti-crisis plan, Finance Minister Anton Siluanov said later on Wednesday. The construction projects scheduled to be complete in 2015 will be financed fully, he said.
Under the plan, the government will provide up to 54 billion rubles to support the agricultural sector, including 4 billion ruble of loan subsidies for domestic equipment purchases. Measures to ease tension on the labor market will require up to 52.2 billion rubles, and the government will allocate 30 billion rubles more for social payments if the number of the unemployed increases.
The government granted regional authorities a right to reduce the single imputed income tax to 7.5% from 15.0% for some types of businesses and to simplify tax payment procedures. The document also envisages a cut value-added tax on domestic flights and railroad traffic to 10% for two years from 18% to support local airlines and commuter traffic, Siluanov also said.
By the end of February, the government will prepare a program to bail out mortgage borrowers who face financial difficulties and to extend low-interest loans on economy class housing construction.
Crisis plan measures besides the spending cuts are targeted at launch of the economy’s structural changes, stabilization of functioning of systemically important organizations, attainment of labor market balance, reduction of inflation and its negative impact on low-income families, and at overall economic sustainability.
