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. Last Updated: 07/27/2016

ROUND TABLE: Revenue Raising Possibilities For a Cash-Strapped Nation




What additional methods might the government use to finance the budget deficit?


I think that the government could already consider issuing new bonds. Theoretically, if International Monetary Fund credits are not forthcoming and if Central Bank reserves are to stay untouched, then it is possible to utilize diplomatic channels and thereby receive credits from other countries. But, I don't believe it likely. It is time to start the revival of the financial markets - a most important sector of the economy - after the GKO crash.


Similarly, it is possible to re-examine privatization as a potential means for topping up the budget. But this is a more remote prospect. Preparing privatization takes several months, at a time when the budget is under great strain in the first quarter.


- Yevgeny Gavrilenkov, deputy director, Bureau of Economic Analysis


Firstly, it is necessary to understand what the general situation is regarding budget tax revenues. According to initial information, the Tax Ministry overfulfilled the January plan for tax collection, enough to partially, perhaps, cover general budget expenses. Partially, these can also be covered by carrying over expenses to a later date. And also, there are Central Bank credits. Some of these measures have already been put into the budget, others will be taken in order to cover cash shortfalls. There's talk that it is possible that some sort of additional domestic means of raising credit will be used. To tap foreign credit markets is, I think, unrealistic right now.


- Alexander Zhukov,


head of the State Duma Budget Committee


It could be credits from the World Bank or Japan, rather than from the IMF.


Secondly, perhaps even more importantly, budgetary revenue sources, most likely aggressive tax collection. I mean the announcement that Gazprom will have to pay off its arrears to the budget by the middle of the year. Also, it seems, plans have been put forward to ensure the payment of debts owed to the Pension Fund. And finally, the more detailed approach to particular companies' arrears continues. For example, [acting President Vladimir] Putin's statements regarding Unified Energy Systems, in my opinion, show that even those companies which, perhaps, are somehow affiliated with or enjoy a privileged relationship with the government, will receive sufficiently tough treatment.


Therefore, I think that the government has reached a stage where it is mobilizing all possible tax revenues accessible within the country.


- Natalya Orlova, economist, Alfa Bank


The government can take fresh credits, print money or sell off precious metals [from the state reserves]. The options are few, thus there is little scope for imagining any extraordinary measures. Whatever it might try, the Finance Ministry has no chance to access the credit markets; it can only utilize non-market credit schemes involving Sberbank or Vneshekonombank. ... Sales of precious metal reserves, as I understand it, are unlikely, because the reserves are not that large. As regards privatization ... such sales cannot be carried out quickly ... Indeed, it's not a very happy moment for it right now either.


With respect to the chances for borrowing from foreign banks, I don't really believe that it is possible to do anything on the foreign markets until after Russia can strike a deal to restructure its existing debts.


The only source left is therefore the Central Bank.


- Sergei Alexashenko,


head of the Center for Development


and former Central Bank deputy chairman


One can imagine all manner of theoretical sources. The question is, what real sources can be found. Here, my optimism fails and I think that the best-case scenario involves the use of credits from one or other bank. Perhaps, a Russian bank, although only Sberbank is capable of lending money to the state. Maybe, a foreign bank could extend credits. The current period is one when, I believe, foreign investors may be prepared to take risks. Of course, theoretically it is possible that the Finance Ministry could return to the bond markets, but I don't expect it will.


- Andrei Vavilov, director,


Institute of Financial Research