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Problems of Investment and Budget Planning and Swfs in Russia

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Problems of Investment and Budget Planning and Swfs in Russia Problems of Investment and Budget Planning and SWFs in Russia International Journal of Economic Research ISSN : 0972-9380 available at http: www.serialsjournals.com „ Serials Publications Pvt. Ltd. Volume 14 • Number 15 (Part 4) • 2017 Problems of Investment and Budget Planning and SWFs in Russia Litvinov Alexei Nikolaevich1, Danilina Marina Viktorovna2, Klonitskaya Anna Yurievna3, Kozlova Svetlana Vyacheslavovna4, Sherbina Tamara Alexeevna5, Chadina Elena Viktorovna6, Mikhailovskaya Natalia Mikhailovna7 and Ermolaeva Elena Nikolaevna8 1,5Ph.D., Assistant professor, Finance University under the government of the Russian Federation, Moscow, Russia 2Ph.D., REU Plekhanov, Finance University under the government of the Russian Federation, Moscow, Russia 3,7,8Ph.D. in economics, Associate Professor, Department Economy of Industry, MAI (Moscow Aviation Institute), National Research University 4Dr.Sc. (Economics), Prof. Department Financial University under the government of the Russian Federation, Moscow, Russia 6Ph..D, Head of the Department of the scientific and research and innovation-entrepreneurship work of the students, Finance University under the government of the Russian Federation, Moscow, Russia ABSTRACT The article analyzes the current state and problems of the investment and budgetary policy of Russia, as well as the role of sovereign wealth funds (the Reserve Fund and the National Welfare Fund). Keywords: Investment, investment policy, budget, sovereign funds, reserve fund, national welfare fund, Russia. Investment and budget policy is one of the most important questions in the Russian Federation at the moment. The rotation of the investment cycle and the contribution to the growth of investment and fixed capital began in the second half of 2012, in 2014 the dynamics of capital investments moved to the negative range (a decrease of 1.5%), and by the end of 2015 the depth of investment decline has reached 10.1%. Since the end of 2015, the rate of reduction in investment in fixed assets began to slow down, in 2016, investment activity stabilized, and by the end of the year the decline was -0.9%. Since early 2017, growth rates have returned to a positive area, and by the results of the first half of the year they amounted to 4.8% [1-5]. In the basic version, the growth of investments in fixed assets in 2017 is projected at 4.1%. The main contribution (3.1 pp.) Will be provided by the private sector, investment growth in which has been maintained 371 International Journal of Economic Research Litvinov Alexei Nikolaevich, Danilina Marina Viktorovna, Klonitskaya Anna Yurievna, Kozlova Svetlana Vyacheslavovna,... since 2016 against the backdrop of a slowdown in the rate of reduction in public capital investments. Investment in the transport complex (without pipeline), construction and real estate and manufacturing (investment in chemical production and engineering) will have a positive impact on the overall dynamics. The main financial resource for restoring investment activity will be profit organizations (in 2015, growth was 17.6%, in 2016 - 17.3%). The implementation of a number of measures developed by the Government of the Russian Federation (the program for concessional lending to small and medium-sized businesses “6.5”, the creation of a “project finance factory” on the basis of Vnesheconombank, and the creation of an effective mechanism for public-private partnership on the principles of “infrastructure mortgage”) will promote growth investments through credit. As a result, in the medium term, it is expected to restore the share of loans to investments in the total volume of loans to the average annual level of the pre-crisis period 2011 -2014. However, against the background of the ongoing reduction in budget capital investments (an average of 4.1% per year), the organizations’ own funds will remain the main investment resource in the medium term. Thus, on average, the increase in investment in fixed assets in 2018-2020 will make 5,3% a year. At such rates of growth, gross fixed capital formation will reach 23.8% of GDP in 2020. The basis for investment growth in the medium term will be an increase in the level of business confidence while maintaining stable macroeconomic conditions. Positive impact on the restoration of investment demand will continue to be limited by the growth of tariffs: a reduction in the costs of companies will allow part of the released funds to be spent on investment needs. Among the risks that arise as a result of tariff restrictions in the investment sphere, we should outline the possible further reduction in the volume of investment projects and programs in the grid complex of the electric power industry. An important factor in restoring the growth of investment activity will be the dynamics of investment in the construction sector and operations with real estate. After a reduction in the share of capital investments in the construction complex and real estate transactions in 2016 to 24.2% by 2020, its gradual recovery is expected to reach the level of 2015. Restoration of investment activity will be facilitated by increased investment in infrastructure projects and services (trade, financial intermediation and operations with real estate). A positive contribution will also be made by capital investments in the fuel and energy complex and the processing industry of oil refining), but against a background of more modest growth in investments in these industries, their share in the total volume of investments in the medium term will decrease. The average annual growth in investments in 2018-2020 in the manufacturing industry (without oil refining) will be about 4%, the main driver of the restoration of investment activity in the manufacturing industry (without oil refining) will be chemical production, which successfully realizes the potential of import substitution: large companies of the chemical complex expect to continue implementing investment projects, including the production of import-substituting products. A positive contribution to the dynamics of investments in manufacturing industries will be supported by the growth of capital investments in the woodworking complex, the engineering industry and light industry [1-5]. Since 2015, the state economic policy (and budget policy as an integral part of it) has focused on overcoming the consequences of the most powerful external shock in the past half century. Its main objectives during the period of adjustment to such a significant structural change in the external conditions were: (1) to ensure an early transition to an equilibrium state with a new economic structure; and (2) minimization International Journal of Economic Research 372 Problems of Investment and Budget Planning and SWFs in Russia of losses in such a transition (see box “Adaptation to external shocks and concomitant economic policy”). Direct adaptation processes as a whole were completed by the second half of 2016, when the price ratio in the traded and non-tradable sectors returned to the level of 2005 and as a whole became consistent with the new structural level of oil prices. In accordance with [3], an effective stabilization economic policy in this case allows to ensure: ∑ Rapid correction of macroeconomic imbalances. Now, with low oil prices, the domestic economy is characterized by: (1) a strong balance of payments with minimal dependence on external financing and a limited vulnerability to volatility in the moods on world markets; (2) a controlled level of budget deficit with an understandable trajectory of reaching a balanced budget; and (3) controlled inflationary dynamics at the level of targets and declining inflation expectations. ∑ Reduced dependence on oil prices. The price of oil that ensures the balance of the current account of the balance of payments has fallen from a level of over $ 100 per barrel in 2013 to $ 35-45 per barrel. Moreover, in 2017, the price of oil balancing the federal budget at the primary level (i.e. before fulfilling the obligations on servicing the public debt) is 60-65 US dollars per barrel, and on the three-year horizon it will decrease to 40-45 US dollars per barrel, while in 2013-2014 for balancing the federal budget at the primary level demanding The price was around 95-105 US dollars per barrel. ∑ Improvement of the structure of the economy. Over the past two years, the share of profit in the structure of the national income has increased significantly (+41.7% in 2016: +2.8 pp from 2014), thus forming an internal, natural source for investment financing. Accompanying the adjustment to external shocks, the growth of competitiveness and profitability of domestic sectors of the traded sector led to an increase in the share of non-oil and gas industry in the GDP structure (from 9.3% in 2014 to 10.6% in 2016). In recent years, there has also been a significant reduction in the debt burden of the non-financial sector and a recovery in the structure of the financial segment, indicating that the economy is now better prepared to transform savings into healthy (efficient) investments. Adaptation to External Shocks and Concomitant Economic Policy Adjusting the balance of payments to sharp and large-scale changes in the price conditions of trade and/ or capital flows requires a transition to a new internal balance of the economy with a lower level of import consumption and/or a higher level of non-oil and gas exports. For the transition to a new equilibrium, a change in the structure of the economy, a mechanism that provides such a transformation- a change in the sectoral price structure, i. The decline in prices in non-tradable sectors relative to prices in traded sectors. The changes also concern the structure of the national income by its sources (the growth of the share of corporate profits in order to accelerate the movement of capital), the structure of domestic demand (growth in the share of investment), employment and imports. Changes in the structure of the economy, which occurred as a result of a large-scale change in relative prices in 1998, can serve as a good example.
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