Analysis of Russia's fiscal sustainability under the new fiscal rules

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Title: Analysis of Russia's fiscal sustainability under the new fiscal rules
Author: Vlasov, Sergey
Organization: Bank of Finland
Suomen Pankki
Department / Unit: Institute for Economies in Transition (BOFIT)
Siirtymätalouksien tutkimuslaitos (BOFIT)
Series: BOFIT Online
Series number: 9/2013
Year of publication: 2013
Publication date: 27.6.2013
Pages: 22 s.
Keywords: Venäjä; julkinen talous; finanssipolitiikka; säännöt; talousarviot; julkiset menot; ennusteet; Bofit-kokoelma; kestävyys
Abstract: This study examines Russia's short- and long run fiscal sustainability. The study reveals the possible risks, if fiscal sustainability deteriorates on the general government budget level. By employing a special fiscal stress index, Russia's public finances are evaluated as sustainable in the short run. In the long run, the study analyzes advantages and limitations of the new fiscal rules, compares the new rules with the previous fiscal rules suspended during the financial crisis and discusses the possibilities for further development of the fiscal rules in Russia. The official long run socio-economic development forecast is employed for the estimates. The analysis suggests that comparing to 2012 government revenue will decrease by 7.5 p.p. of GDP by 2050, explained by the drop in oil-and-gas revenue by 8.7 p.p. of GDP. Government expenditure will decrease by 6.0 p.p. of GDP. The value of government net worth will become negative by 2050 but on the infinite projection horizon should stabilize on the safe level close to -15% of GDP. Keywords: fiscal sustainability, fiscal stress index, fiscal rules, general government budget, budget forecast

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