BOFIT Viikkokatsaus / BOFIT Weekly Review 2016/30
The federal budget deficit next year would be limited to slightly over 3 % of GDP (about the same as estimated for this year). Thereafter, following instructions by president Vladimir Putin, the target is the deficit would shrink by one percentage point of GDP annually.
Siluanov noted that the starting point for federal budget spending is this year’s targeted nominal sum, after cuts from the budget approved last winter, which would remain the same in coming years. This would mean a further downward slide of government spending in real terms, even if spending has already declined by roughly 10 % over the past year and a half. Siluanov added that the government is set to safeguarding entitlements related to pensions and other social benefits, as well as public sector wages. He expects cutting budget spending in other categories will be an exceptionally challenging task.