MOSCOW (Reuters) - The Russian government, facing an economic slowdown, will have to focus its spending efforts on priority areas, Prime Minister Dmitry Medvedev said on Monday.
Medvedev was addressing a meeting of a fiscal planning commission at which new figures were released showing that federal spending would rise by only 3 percent in nominal terms next year.
That represents a sharp slowdown from spending growth of 17.8 percent last year, stoked by pre-election spending that helped President Vladimir Putin win election for a third presidential term.
“It’s obvious that, in the difficult current circumstances, we need to concentrate resources on key programs,” Medvedev said. “I also hope it is obvious to everyone that it will also be necessary to spend efficiently.”
Briefing reporters later, Finance Minister Anton Siluanov said Medvedev had backed the belt-tightening spending plan, which would uphold the terms of a so-called fiscal rule introduced last year to contain borrowing.
Savings would come from reducing transfers to the state pension fund, a 5 percent in state procurement spending and unspecified changes to defense outlays, he said.
“Taking into account the slowdown in the pace of growth, revenues falling rather than rising in relation to our earlier forecasts,” said Siluanov.
The downbeat comments echoed the tone set by Putin in his annual budget statement on June 13, when he said the government could not continue to raise spending for ever.
Putin reshuffled his economic team on Monday, and his new economy minister, Alexei Ulyukayev, said his primary task in government would be to stave off a possible recession.
Economic growth, at 1.8 percent in the first five months of the year, has fallen to its slowest pace in four years.
Under the draft three-year fiscal plan, the pace of nominal spending growth will pick up in 2015 and 2016. The Finance Ministry expects to run a small budget deficit in the next three years, breaking Putin’s promise to balance the budget by 2015.
Reporting by Darya Korsunskaya; Writing by Douglas Busvine; editing by Ron Askew