BOFIT Viikkokatsaus / BOFIT Weekly Review 2021/43

Russia’s long-term economic policy is based on the National Goals for 2030 announced by president Putin in July 2020. The five umbrella themes of the 2030 national goals are a) preservation of the population, the health and welfare of the people; b) conditions for self-fulfilment and the unlocking of talent; c) comfortable and safe environment; d) decent and effective jobs, and successful enterprise; and e) digital transformation.

Currently, there are 15 national projects to support the national goals. Implementation of these national projects will annually cost 4–5 trillion rubles (3‒4 % of GDP) during 2021‒2024. About two-thirds of the money would be financed out of the federal budget. The most budget funds would go to road construction and other infrastructure projects, as well as the national demographic and healthcare projects (with most of that money going to fund the maternity capital allowance paid to parents of newborns, as well as for treatment and prevention of cancer and cardiovascular disease).

The newest additions to the family of 2030 plans are the 42 strategic initiatives approved by the Russian government at the beginning of October that complement and support realisation of the national projects. The initiatives, which are quite heterogeneous, concern the social sector, construction, ecology, digitalisation and technological advancement. They place greater emphasis on issues related to climate change, but also call for such measures as developing new hydrocarbon deposits, substituting foreign production technology for liquefied natural gas (LNG) and other hydrocarbon extraction with domestic production technology, as well as increase the cargo tonnage shipped via the Northeast Passage. The projects also include such themes as self-driving vehicles and digitalisation of public services.

The government estimates that the financing needs for the strategic initiatives total 4.6 trillion rubles during 2022‒2024. According to the finance ministry, the initiatives will receive about 1 trillion rubles in budget funding, of which about half is new funding.

Russia’s economic development plans have increasingly stressed the role of the state-funded projects in recent years. From economic perspective, these projects may provide business opportunities for some firms, but their broader contribution to economic development may be limited. In Russia, government spending is typically inefficient and susceptible to abuse. Broad-based structural reforms have received less attention in Russia’s economic development programmes, even if they are critical to improving the country’s long-term growth prospects.

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