BOFIT Viikkokatsaus / BOFIT Weekly 2017/23

In late May, president Putin was presented with two economic development programmes that Putin had requested, but a decision is yet to be made of what will be the final development programme. The two proposals differ mostly in their approaches to monetary and fiscal policy. The proposal prepared by the team led by former finance minister Alexei Kudrin pushes for stable economic development based on the pursuit of moderate monetary and fiscal policies. In contrast, the "Stolypin Club" proposal would take a lighter monetary and fiscal stance and calls for large stimulus measures funded by the central bank and government budgets.

The proposals are closer to each other in terms of structural policy. Both call for e.g. measures to improve the business environment, spending on education & retraining and healthcare, as well as development of technology and the digital economy. Kudrin's plan calls for openness in trade policy, while the Stolypin Club favours a more protectionist line.

Putin is expected to combine measures proposed in both proposals as well as in a programme prepared by the government. The president's economic policy line has often highlighted economic stability and independence, which means e.g. restraining inflation and the government budget deficit, while encouraging import substitution. In addition, "digital economy" emerged as the term du jour at the St. Petersburg economic forum last week.

No matter what the final programme's composition, the biggest challenge will be its implementation. The successes at implementation of earlier Russian development programmes have been modest.

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