Russia's economy cannot be modernized if the government sticks to its target of having a balanced budget in 2015, Rossiyskaya Gazeta newspaper quoted Deputy Economic Development Minister Andrei Klepach as saying on Tuesday.
In 2010, the deficit amounted to 3.9% of gross domestic product, below the government's expectations of 5.3%. This year, the government wants to cut it to 3.6%. But at the same time the government faces the task of modernizing the country's economy which, like in the Soviet times, strongly depends on the price for oil, its key export.
"A balanced budget will not allow tackling the innovation development problem. We will have to maintain a budget deficit much further than 2015, perhaps, to 2030," Klepach said.
The Economic Development Ministry believes that given the government's commitments to the pension system, national defense, infrastructure investment, education and healthcare, Russia cannot sustain a balanced budget without a budget "shock."
"And (the shock), in turn, may result in many undesirable social and economic consequences," Klepach said.
The Economic Development Ministry forecasts Russia's budget deficit after 2015 to be at about 2% of GDP with the government having to increase debt to 30-35% of GDP to finance it.
"This is not that much by world standards, the Maastricht Agreement allows having public debt of 60%," Klepach said, adding that Russian debt was more expensive than that of European states.
"The task is to find a compromise between the goals of development, modernization, and their cost for the budget."
MOSCOW, January 25 (RIA Novosti)