The rule is used as follows:

According to the official position of the Ministry of Finance, the budget rule reduces the dependence of the federal budget on the state of world markets, and also provides a "safety cushion" in case of a crisis similar to the 2008 crisis.

History of the rule

The principle embodied in the budget rule has actually been in effect since 2004, when the Stabilization Fund was formed. For this fund, the following formation procedure was in effect: oil and gas revenues over cut-off prices, which was $20 per barrel of oil in 2004, $27 in 2006. At the same time, the dynamics of oil prices significantly outstripped the growth of the cut-off price. According to experts, the Stabilization Fund received up to ¾ of additional income from a favorable external environment.

Decree of the Government of the Russian Federation of March 4, 2013 No. 293-r of the state program “Public Financial Management” provides for the possibility of subsequent extension of automatic stabilizers to other elements and levels of the budget system, among other things, in terms of the debt policy of the constituent entities of the Russian Federation and municipalities. Employees of the Ministry of Finance do not deny the possibility of applying the budget rule in the future for the budgets of regions and municipalities.

Opinions of economists and statesmen

The budget rule performs two main functions: it determines the algorithm for distributing oil and gas revenues in terms of sovereign funds and sets limits on the expenditure side of the budget. In connection with the latter function, there is a discussion in the expert community about the advisability of establishing such a rule.

There are two main views on the problem:

• it is necessary to soften the budget rule in terms of restrictions on government spending;
• it is necessary to maintain a strict rule limiting public spending.

Aide to the President of Russia Andrey Belousov, who proposed lowering the threshold of the Reserve Fund from 7 to 5% of GDP, in order to direct the released funds to the construction of roads, the state of which hinders the growth of the country's economy, as well as Deputy Minister of Economic Development Andrey Klepach, consistently advocates softening the budget rule.

This position is supported by the Minister of Economic Development Aleksey Ulyukaev, who said that the budget rule should be "sensitive to the investment cycle or vary depending on the investment situation." According to Deputy Prime Minister Olga Golodets, the rule has a negative impact on the economic and social development of the country - not only social, but also investment costs are in question.

The Ministry of Finance of the Russian Federation, represented by Minister Anton Siluanov, is in favor of maintaining a strict budget rule. The introduction of the budget rule was welcomed by the International Monetary Fund, represented by the head of the IMF mission in Russia, adviser to the European management, Antonio Spilimbergo.

Arguments for relaxing the rule

Arguments for keeping the rule

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Notes

Links

• Yakovenko Dmitry.(Russian). "Expert" No. 18-19 (897) (April 28, 2014). Retrieved May 3, 2014.
• Alexander Aivazov.. IA REGNUM (April 28, 2013). Retrieved May 3, 2014.
• . Budget.ru (March 29, 2013). Retrieved May 3, 2014.

An excerpt characterizing the Budget Rule

“Well, that’s good,” continued the regimental commander. “People get a glass of vodka from me,” he added, so that the soldiers could hear. – Thank you all! Thank God! - And he, having overtaken a company, drove up to another.
“Well, he really is a good man; You can serve with him,” Timokhin subaltern said to the officer walking beside him.
- One word, red! ... (the regimental commander was nicknamed the red king) - the subaltern officer said, laughing.
The happy mood of the authorities after the review passed to the soldiers. Rota was having fun. Soldiers' voices were talking from all sides.
- How did they say, Kutuzov crooked, about one eye?
- But no! Totally crooked.
- Not ... brother, more big-eyed than you. Boots and collars - looked around everything ...
- How does he, my brother, look at my feet ... well! think…
- And the other is an Austrian, he was with him, as if smeared with chalk. Like flour, white. I'm tea, how they clean ammunition!
- What, Fedeshow! ... he said, perhaps, when the guards begin, did you stand closer? They said everything, Bunaparte himself is standing in Brunov.
- Bunaparte stands! you lie, fool! What does not know! Now the Prussian is in revolt. The Austrian, therefore, pacifies him. As soon as he reconciles, then war will open with Bounaparte. And then, he says, in Brunov, Bunaparte is standing! It's obvious that he's an idiot. You listen more.
“Look, damn tenants! The fifth company, look, is already turning into the village, they will cook porridge, and we will not reach the place yet.
- Give me a cracker, damn it.
“Did you give tobacco yesterday?” That's it, brother. Well, on, God is with you.
- If only they made a halt, otherwise you won’t eat another five miles of proprem.
- It was nice how the Germans gave us strollers. You go, know: it's important!
- And here, brother, the people went completely frantic. There everything seemed to be a Pole, everything was of the Russian crown; and now, brother, a solid German has gone.
- Songwriters ahead! - I heard the cry of the captain.
And twenty people ran out in front of the company from different ranks. The drummer sings turned around to face the song-books, and, waving his hand, sang a drawn-out soldier's song, beginning: "Isn't it dawn, the sun was breaking up ..." and ending with the words: "That, brothers, will be glory to us with Kamensky father ..." in Turkey and was now sung in Austria, only with the change that in place of "Kamensky father" the words were inserted: "Kutuzov's father."
Tearing off these last words like a soldier and waving his arms as if he were throwing something on the ground, the drummer, a dry and handsome soldier of about forty, sternly looked around at the songwriter soldiers and closed his eyes. Then, making sure that all eyes were fixed on him, he seemed to carefully lift with both hands some invisible, precious thing above his head, held it like that for several seconds, and suddenly threw it desperately:
Oh, you, my canopy, my canopy!
“Canopy my new…”, twenty voices picked up, and the spoonman, despite the heaviness of the ammunition, briskly jumped forward and walked backwards in front of the company, moving his shoulders and threatening someone with spoons. The soldiers, swinging their arms to the beat of the song, walked with a spacious step, involuntarily hitting the leg. Behind the company came the sounds of wheels, the crunch of springs and the clatter of horses.
Kutuzov with his retinue was returning to the city. The commander-in-chief signaled that the people should continue to walk freely, and pleasure was expressed on his face and on all the faces of his retinue at the sound of the song, at the sight of the dancing soldier and the merrily and briskly marching soldiers of the company. In the second row, from the right flank, from which the carriage overtook the companies, a blue-eyed soldier, Dolokhov, involuntarily caught the eye, who walked especially briskly and gracefully to the beat of the song and looked at the faces of the passers-by with such an expression as if he pitied everyone who did not go at this time with a company. A hussar cornet from Kutuzov's retinue, mimicking the regimental commander, lagged behind the carriage and drove up to Dolokhov.
The hussar cornet Zherkov at one time in St. Petersburg belonged to that violent society led by Dolokhov. Zherkov met Dolokhov abroad as a soldier, but did not consider it necessary to recognize him. Now, after Kutuzov's conversation with the demoted one, he turned to him with the joy of an old friend:
- Dear friend, how are you? - he said at the sound of the song, equalizing the step of his horse with the step of the company.
- I am like? - answered Dolokhov coldly, - as you can see.
The lively song attached particular importance to the tone of cheeky gaiety with which Zherkov spoke, and the deliberate coldness of Dolokhov's answers.
- So, how do you get along with the authorities? Zherkov asked.
Nothing, good people. How did you get into the headquarters?
- Seconded, I'm on duty.
They were silent.
“I let the falcon out of my right sleeve,” said the song, involuntarily arousing a cheerful, cheerful feeling. Their conversation would probably have been different if they had not spoken at the sound of a song.
- What is true, the Austrians were beaten? Dolokhov asked.
“The devil knows, they say.
“I am glad,” Dolokhov answered briefly and clearly, as the song demanded.
- Well, come to us when in the evening, the pharaoh will pawn, - said Zherkov.
Or do you have a lot of money?
- Come.
- It is forbidden. He gave a vow. I don't drink or play until it's done.
Well, before the first thing...
- You'll see it there.
Again they were silent.
“Come in, if you need anything, everyone at headquarters will help…” said Zherkov.
Dolokhov chuckled.
“You better not worry. What I need, I won't ask, I'll take it myself.
"Yeah, well, I'm so...
- Well, so am I.
- Goodbye.
- Be healthy…
... and high and far,
On the home side...
Zherkov touched his horse with his spurs, which three times, getting excited, kicked, not knowing where to start, coped and galloped, overtaking the company and catching up with the carriage, also in time with the song.

Returning from the review, Kutuzov, accompanied by the Austrian general, went to his office and, calling the adjutant, ordered to give himself some papers relating to the state of the incoming troops, and letters received from Archduke Ferdinand, who commanded the advanced army. Prince Andrei Bolkonsky with the required papers entered the office of the commander in chief. In front of the plan laid out on the table sat Kutuzov and an Austrian member of the Hofkriegsrat.
“Ah ...” said Kutuzov, looking back at Bolkonsky, as if by this word inviting the adjutant to wait, and continued the conversation begun in French.
“I only say one thing, General,” Kutuzov said with a pleasant elegance of expression and intonation, forcing one to listen to every leisurely spoken word. It was evident that Kutuzov listened to himself with pleasure. - I only say one thing, General, that if the matter depended on my personal desire, then the will of His Majesty Emperor Franz would have been fulfilled long ago. I would have joined the Archduke long ago. And believe my honor, that for me personally to transfer the higher command of the army more than I am to a knowledgeable and skillful general, such as Austria is so plentiful, and to lay down all this heavy responsibility for me personally would be a joy. But circumstances are stronger than us, General.
And Kutuzov smiled with such an expression as if he were saying: “You have every right not to believe me, and even I don’t care whether you believe me or not, but you have no reason to tell me this. And that's the whole point."
The Austrian general looked dissatisfied, but could not answer Kutuzov in the same tone.
“On the contrary,” he said in a grouchy and angry tone, so contrary to the flattering meaning of the words spoken, “on the contrary, Your Excellency’s participation in the common cause is highly valued by His Majesty; but we believe that a real slowdown deprives the glorious Russian troops and their commanders of those laurels that they are accustomed to reap in battle, ”he finished the apparently prepared phrase.
Kutuzov bowed without changing his smile.
- And I am so convinced and, based on the last letter that His Highness Archduke Ferdinand honored me, I assume that the Austrian troops, under the command of such a skilled assistant as General Mack, have now already won a decisive victory and no longer need our help, - Kutuzov said.
The general frowned. Although there was no positive news about the defeat of the Austrians, there were too many circumstances confirming the general unfavorable rumors; and therefore Kutuzov's assumption about the victory of the Austrians was very similar to a mockery. But Kutuzov smiled meekly, still with the same expression that said that he had the right to assume this. Indeed, the last letter he received from Mack's army informed him of the victory and the most advantageous strategic position of the army.
“Give me this letter here,” said Kutuzov, turning to Prince Andrei. - Here you are, if you want to see it. - And Kutuzov, with a mocking smile on the ends of his lips, read the following passage from the letter of Archduke Ferdinand from the German-Austrian general: “Wir haben vollkommen zusammengehaltene Krafte, nahe an 70,000 Mann, um den Feind, wenn er den Lech passirte, angreifen und schlagen zu konnen. Wir konnen, da wir Meister von Ulm sind, den Vortheil, auch von beiden Uferien der Donau Meister zu bleiben, nicht verlieren; mithin auch jeden Augenblick, wenn der Feind den Lech nicht passirte, die Donau ubersetzen, uns auf seine Communikations Linie werfen, die Donau unterhalb repassiren und dem Feinde, wenn er sich gegen unsere treue Allirte mit ganzer Macht wenden wollte, seine Absicht alabald vereitelien. Wir werden auf solche Weise den Zeitpunkt, wo die Kaiserlich Ruseische Armee ausgerustet sein wird, muthig entgegenharren, und sodann leicht gemeinschaftlich die Moglichkeit finden, dem Feinde das Schicksal zuzubereiten, so er verdient.” [We have a fully concentrated force, about 70,000 people, so that we can attack and defeat the enemy if he crosses the Lech. Since we already own Ulm, we can retain the advantage of commanding both banks of the Danube, therefore, every minute, if the enemy does not cross the Lech, cross the Danube, rush to his communication line, cross the Danube lower and the enemy, if he decides to turn all his strength on our faithful allies, to prevent his intention from being fulfilled. Thus, we will cheerfully await the time when the imperial Russian army is completely ready, and then together we will easily find an opportunity to prepare the enemy for the fate he deserves.

MOSCOW, July 14 - RIA Novosti. The State Duma at a plenary session on Friday adopted in the second reading a government bill on a new design of the budget rule and on the merger of the National Welfare Fund (NWF) and the Reserve Fund on the basis of the NWF.

budget rule

The cut-off bar for the price of Urals oil in the updated budget rule is set at $40 per barrel. Oil and gas revenues received at a price above this bar will be directed to reserves.

The bill defines the ceiling on federal budget expenditures, which cannot exceed the amount of oil and gas revenues calculated on the basis of the base oil price, the base export price of natural gas and the forecast exchange rate, non-oil and gas revenues, as well as public debt service costs. The base price for Urals oil is set at $40 per barrel in 2017 prices and is subject to annual indexation by 2% starting from 2018.

FNB + Reserve Fund

In the second reading, amendments were made to the draft law on the merger of sovereign funds of the Russian Federation on the basis of the National Welfare Fund. Deputy Finance Minister Vladimir Kolychev explained that such a merger is expected in conditions where the Reserve Fund is predicted to run out against the background of oil prices that have fallen significantly over the past two or three years.

At the same time, the target component of this fund remains the same as the goals of the previous two funds: financing aimed at balancing the insurance pension system, financing the federal budget deficit and co-financing voluntary pension savings. It is supposed to form a joint fund at the expense of additional oil and gas revenues.

If the total amount of funds in the pooled fund exceeds 5% of GDP, it is proposed to limit its use to falling oil and gas revenues, if the total amount of funds is less than 5%, then limit this amount to 1% of GDP.

The amendments provide that the funds of the Reserve Fund are credited to the NWF (combined fund) no later than February 1, 2018. The Ministry of Finance will monthly publish information on the value of the assets of the National Welfare Fund at the beginning of the reporting month, the transfer of funds to the specified fund, their placement and use in the reporting month.

According to the approved amendments, until the amount of the NWF funds placed with the Bank of Russia at the end of the next financial year and (or) the first and (or) second years of the planning period reaches 7% of the forecast volume of GDP, the placement of the NWF funds in other financial assets is not allowed, for except for the financing of self-sustaining infrastructure projects started before January 1, 2018.

Article in the journal "Economic Issues": "Budget rules as an instrument of a balanced budget policy" A. Kudrin, I. Sokolov

The article analyzes the consistency and balance of the previously existing and currently applied in Russia budget rules, what requirements an effective budget rule in modern conditions should meet - to allow the budget to be adapted to the requirements of financing structural changes in the economy while maintaining control over long-term budget sustainability. However, the new design of budget rules introduced in July 2017, by imposing excessively strict restrictions on the volume of federal budget expenditures, will not make it possible to ensure the necessary amount of expenditures for economic development and financing of structural reforms. The article substantiates the need for a consistent transformation of the current version of the budget rules towards a design based on a zero structural balance. The formation of a federal budget balanced on a cyclical basis can ensure a relatively stable level of spending regardless of the volatility of oil prices and phases of economic cycles, realize the countercyclical nature of budgetary policy, and reduce the budget's vulnerability to internal and external shocks. The effectiveness of the proposed fiscal rule has been verified by modeling on data for 2007-2016. In particular, the transition to the proposed rule from the second half of the 2000s would have made it possible to contain the growth of federal budget expenditures due to anti-crisis measures in 2009, reduce the level of public debt and accumulate sovereign reserves in the amount of up to 25% of GDP. The proposed rule imposes increased requirements on the quality of macroeconomic and budget forecasting.

Keywords: budget rules, budget policy, structural balance of the budget, budget expenditures, sovereign reserves, public debt.

JEL: H50, H61, H62, H68.

For the budgetary policy of any state, the urgent task is to maintain the optimal - in terms of the balance of interests (between budgetary sustainability and financing of socio-economic development) - level of expenditure. Traditional tools for solving this problem include budget rules, which establish quantitative restrictions on certain budget parameters: the amount of public debt, deficit (including structural), expenditures (in % of GDP, growth rates), revenues (IMF, 2009. P. 4-5). In addition to numerical indicators, budget rules may establish separate procedural rules aimed at introducing good budget planning practices, increasing the predictability and transparency of the budget process. In general, if properly designed, the rules should help both prevent the formation of risks for fiscal sustainability and expand the budget's ability to adapt to the needs of the economy, taking into account the cyclical nature of its development.

Moreover, fiscal rules serve the purpose of containing politically motivated spending (Schick, 2003). As A. Alesina and A. Passalacqua note, there are several channels of negative policy impact on fiscal sustainability (Alesina, Passalacqua, 2015):

• incomplete implementation of the counter-cyclical nature of budget policy: during a recession, the state finances through borrowing additional spending aimed at stabilizing the economy, but does not raise taxes during an upsurge, as this creates risks for the re-election of politicians;
• due to the need for re-election, politicians are forced to finance first of all expenses, the results of which are visible to the voter. At the same time, the vast majority of expenses, as a rule, are unproductive;
• attempts by individual politicians to back out of spending increases may not have the desired effect, as other politicians may benefit from increased access to public funding.

That is why the budget rules are designed to become a tool for “prevention” of problems with long periods of state budget deficit arising due to political reasons and constant postponing of budgetary consolidation measures that are considered unpopular.

Also, fiscal rules should be flexible enough to respond to shocks. According to the IMF, flexibility may be required to respond to shocks in output and inflation, interest rate and exchange rate volatility, and other unforeseen shocks such as national disasters (IMF, 2009, p. 20).

The evolution of fiscal rules in Russia

Prior to the entry into force of the Budget Code of the Russian Federation (hereinafter referred to as the Budget Code), the budget process in the country was carried out in accordance with the Law of October 10, 1991 No. 1734-1 “On the Fundamentals of the Budget Structure and Budget Process in the RSFSR”. This law secured the right to set limits on the deficit of the corresponding budget. A budget imbalance limit was provided, which was set as a surplus/deficit in the form of an absolute value or a percentage of projected revenues. There were also laws on state internal and external debt, according to which their maximum volumes for the coming financial year were determined. Russian legislation did not provide for any specific quantitative restrictions on budget parameters, therefore, it can be assumed that the prototype of the budget rules that appeared later in Russian practice was enshrined in law only in 2000, with the entry into force of the Budget Code. The latter set limits on the size of the federal budget deficit, which could not exceed the total volume of budget investments and expenditures on servicing the state debt of the Russian Federation; restrictions in terms of the maximum volume of state external borrowings of the Russian Federation - it should not exceed the annual volume of payments for servicing and repaying the state external debt of the Russian Federation. It also fixed separate provisions on the use of additional revenues (in excess of those approved by the law on the federal budget) to reduce the size of the federal budget deficit and pay the debt without making changes and additions to the law on the federal budget.

Legislative consolidation of the above restrictions in the early 2000s became especially relevant in the face of rising oil prices and additional revenues to the federal budget. So, if in 1998 the average oil price was about 12 dollars per barrel, then in 2003 it was already 27.3 dollars per barrel.

In order to contain inflation, which was growing under the influence of foreign currency inflows from the sale of oil at higher prices, it was necessary to find non-issuance mechanisms for sterilizing excess foreign exchange earnings without a significant strengthening of the ruble. With the high dependence of the federal budget on oil prices, it was required to implement the principles of a countercyclical budget by creating an automatic mechanism within which, on the one hand, state savings would be formed, and on the other hand, they would be used to purchase foreign exchange earnings from oil exports.

First system attempt To solve this problem was undertaken in 2004, when the Stabilization Fund (hereinafter referred to as the Stabilization Fund) was created, designed to accumulate market-driven high revenues from the sale of oil and use them to maintain a stable level of budget expenditures and repay external debt in unfavorable periods. The Stabilization Fund was supposed to receive additional federal budget revenues from the export customs duty on oil and the tax on oil production, which are formed due to the excess of oil prices over the base price, set at $20 per barrel. In addition, as a general rule, the balances of federal budget funds at the beginning of the year, including income from the placement of its funds, were to be credited to the Stabilization Fund.

The stabilization fund was considered as part of the federal budget, subject to separate accounting, management and use. The management of its funds was entrusted to the Ministry of Finance of Russia with the ability to delegate certain powers to the Central Bank of the Russian Federation. The Stabilization Fund was supposed to be invested in debt obligations of foreign countries whose currencies have the status of reserves. It was possible to spend the Stabilization Fund primarily to finance the federal budget deficit when the oil price fell below the baseline, while the maximum volume of attraction of its funds within one year was not established by law. Other areas of spending the Stabilization Fund were allowed only if its accumulated volume exceeded 500 billion rubles.

Due to the excess of the actual oil price over the base “cut-off price”, the volume of the Stabilization Fund formed at the level of 3.1% of GDP as early as 2004. the original design of the budget rule. In particular, the Federal Law of December 23, 2004 No. 173-FZ “On the Federal Budget for 2005” provided for the possibility of using the fund’s funds to reduce the external public debt of the Russian Federation, and if cash balances exceeded 500 billion rubles. - and for current purposes, including financing the Pension Fund's budget deficit and stimulating investment activity. At the end of 2005, it became clear that the "cut-off price" of $20/bbl. does not allow full financing of all planned spending decisions, therefore, amendments were made to the Budget Code in terms of establishing a new base price for oil, equivalent to $197.1 per 1 ton ($27/bbl). Nevertheless, in 2006, the Fund's receipts continued to grow, in connection with which a comparable amount (604.7 billion rubles) was additionally directed to repay the external debt. By the end of 2007, the accumulated volume of the Stabilization Fund increased to 3849.1 billion rubles, or 11.6% of GDP.

Despite the fact that the specified amount of the Stabilization Fund looked rather modest compared to similar funds in other countries rich in raw materials, the very fact of the rapid and relatively “easy” accumulation of funds in it with the almost complete repayment of external public debt created conditions when political pressure began to be exerted on the government. pressure to start using the funds accumulated in the Stabilization Fund "within the country". As a result, some of these funds were already in 2007 transferred to the authorized capital of development institutions: the property contribution to Vnesheconombank (VEB) amounted to 180 billion rubles, to the Investment Fund - 90 billion rubles. and in the State Corporation "Rosnano" - 30 billion rubles.

It was also decided to split the Stabilization Fund into two funds for different purposes. The Reserve Fund became an analogue of the Stabilization Fund. Additional revenues that exceeded the amount of contributions to it were to be directed to the National Wealth Fund (NWF), the funds of which were intended to provide co-financing of voluntary pension savings of citizens and to balance the budget of the Pension Fund of the Russian Federation.

In general, the Stabilization Fund during its operation successfully performed a sterilizing function, limiting the excessive growth of expenditures and the monetary base. Fund resources in the period under review were mainly used to repay external debt, which also contributed to strengthening fiscal stability and improving the country's credit rating. Thus, the general approach to the implementation of budgetary policy in the mid-2000s was based on the idea of ​​“partial savings in raw material revenues during periods of intensive development of the subsoil and high prices for raw materials and the use of savings in the event of a reduction in production or a fall in prices” (Kudrin, 2006, p. 5).

The transformation of the Stabilization Fund into two sovereign funds and the change in conceptual approaches to the construction of budget rules marked the second stage in the functioning of the budget rules, which covered the period from 2008 to 2012. Their new version was based on the “concept of the non-oil and gas budget”. Oil and gas revenues, consisting of MET on hydrocarbons (oil, combustible natural gas and gas condensate) and export customs duties on crude oil, natural gas and oil products, were subject to separate accounting and use. Annually, the allowable amount of their use (oil and gas transfer) was established in the framework of the adoption of the federal law on the federal budget in the form of a fixed share as a percentage of GDP. For 2008-2010 a “transitional period” was envisaged, during which the oil and gas transfer was supposed to decrease from 6.1% of GDP successively to 5.3%, 4.5%, and from 2011 to reach a long-term level of 3.7% of GDP.

Oil and gas revenues that exceeded the amount of the transfer were to go to the Reserve Fund. If oil and gas revenues were insufficient to cover the transfer, it was supposed to be compensated from the Reserve Fund. If oil and gas revenues exceeded both the oil and gas transfer and the normative amount of the Reserve Fund, then they should have been directed to the National Welfare Fund.

This version of the norms of the Budget Code, dedicated to the use of oil and gas revenues, came into force in 2008, however, in practice, most of them were hardly applied due to the onset of the economic crisis. Some norms were suspended: on separate planning of oil and gas and non-oil and gas revenues; on the formation and use of oil and gas transfer; on the size and sources of formation of the Reserve Fund and the National Welfare Fund; on the transfer of income from the management of funds of funds to their income; norms determining the size of the non-oil and gas deficit and the maximum size of the total volume of sources of financing the deficit. All incoming oil and gas revenues were to be used to finance budget expenditures.

The created system of replenishment of funds through the formation of an oil and gas transfer did not last long, as this structure became incapacitated: oil and gas revenues were not enough to finance budget expenditures, and the resulting deficit began to be covered by the Reserve Fund. Accordingly, the NWF ceased to be replenished, since the size of the Reserve Fund did not exceed the budget standard of 10% of GDP in any year of the period under review; at the same time, the country's domestic debt grew.

However, although from 2008 to 2012 the Reserve Fund was used like all other balances of free funds in the accounts of the federal budget, it basically fulfilled its functions of stabilizing and balancing the federal budget, allowing it to maintain budgetary and macroeconomic stability in the country during the crisis, not allow spending cuts and uncontrolled growth of public debt. The funds of the National Welfare Fund were used to support the banking system and the real sector of the economy, which formally does not contradict the principles of placing the fund's funds on long-term deposits of VEB. The advantage of the fiscal rule in force since 2008 was its simplicity: the size of the oil and gas transfer was fixed as a share of GDP and did not depend on the dynamics of oil prices. At the same time, setting the amount of the transfer is difficult to justify from an economic point of view: such decisions are extremely subjective and subjective to lobbying pressure (Drobyshevsky, Sinelnikov-Murylev, 2012, p. 7). With a consistently favorable price environment on the oil market, there will inevitably be risks of an upward revision of its size, which will affect the ability of this rule to limit spending at a level that is safe from the point of view of budgetary balance.

The transition to the third version of the budget rules dates back to 2013. According to experts, these budget rules were characterized by greater complexity and flexibility, since they took into account the accumulated experience and should have better responded to cyclical fluctuations in the economy (Vlasov et al., 2013. p. 36) . Demand for a more stable construction of budgetary rules arose immediately after the 2008-2009 crisis was over, since it is necessary “to be prepared for similar situations and at any oil price to ensure the fulfillment of state obligations” (Kudrin, 2011, p. 4).

In particular, as part of the new version of the budget rules, it was decided to abandon the use of the oil and gas transfer fixed as a percentage of GDP, since in the context of a chronic lag in the growth rates of production and exports of oil and petroleum products from the growth rates of the economy, this would lead to a drop in oil and gas revenues below the level required to cover the transfer, and underfunding costs. In fact, there was a return to the mechanism for the formation of the Stabilization Fund with the following modifications:

• the base oil price, above which the formation of the Reserve Fund, was set not in absolute terms, but as an average over the past 10 years (when the rules were introduced, the countdown began from 5 years, adding one year each year). It was believed that this option for determining the “cut-off price” would smooth out the impact of short-term sharp price deviations and adapt to long-term trends;

• the composition of taxes that act as income sources of funds was based on the structure of oil and gas revenues, while only export duties on crude oil and the mineral extraction tax on oil were credited to the Stabilization Fund. The normative value of the Reserve Fund was reduced from 10% to 7% of GDP. The maximum volume of budget expenditures was not to exceed the estimated amount of income at the base oil price increased by 1% of GDP. At the same time, it was not allowed to reduce expenditures for the next year, as well as the first year of the planning period, in comparison with the volume approved by the law on the budget for the previous year, without taking into account the conditionally approved expenditures. The fulfillment of this norm, if necessary, should be ensured at the expense of additional oil and gas revenues or the resources of the Reserve Fund.

Directions for using the resources of the Reserve Fund were noticeably expanded. In addition to the already traditional ones - to cover the federal budget deficit and early repayment of the state debt - it has become possible to use additional oil and gas revenues that were previously supposed to be directed to the Reserve Fund to compensate for both shortfalls in non-oil and gas revenues, if the actual revenues are less than forecast, and lost revenues. from privatization and government borrowing. This norm actually removed the last restrictions on the directions of spending the funds of the Reserve Fund, de facto disavowing the very essence of the budget rules.

The fall in oil prices that began in the second half of 2014 and the deterioration in the dynamics of economic development predetermined the trend towards a gradual tightening of the budget policy, since the accumulated reserves became steadily insufficient to finance budget expenditures at the same level. In addition to spending the resources of the Reserve Fund, the public debt of the Russian Federation began to grow.

Since 2015, the Government of the Russian Federation suspended the application of the budget rule, switching to “manual” management of the federal budget, for which it was necessary to abandon the three-year budget: the federal budget was adopted only for 2016. This decision, on the one hand, made it possible to respond flexibly to emerging external macroeconomic risks (falling oil prices, weakening of the ruble, inflationary processes, economic sanctions), but, on the other hand, worsened the predictability and clarity of the ongoing budget policy, especially in terms of investment spending.

With a significant reduction in federal budget revenues, the pace of optimization of expenditures slowed down, which led to an increase in the budget deficit, which was financed mainly at the expense of the Reserve Fund. As a result, by the beginning of 2017, the Reserve Fund was almost exhausted and could no longer serve as a full-fledged tool for managing budgetary risks in the foreseeable future.

The fiscal rules themselves (in the 2013 version), although formally considered valid, did not allow for the necessary adaptation of the budget to the observed sharp decline in oil prices for a number of reasons:

• the procyclicality of determining the base oil price, which was defined as the average for the previous 10 years (on a retrospective basis) and did not allow sufficient adaptation of budget expenditures to the sharply reduced oil and gas revenues observed only in the last year of the calculation period (2015);
• asymmetry of accumulation and expenditure of funds, expressed in the ability to replace lost non-oil and gas revenues, proceeds from privatization and debt borrowings at the expense of oil and gas revenues previously accumulated in the Reserve Fund. Recall that in 2013-2014, in the conditions of record high oil prices, less than 7% of budget oil and gas revenues were directed to the Reserve Fund;
• a high proportion of socially conditioned and equivalent obligations in the volume of federal budget expenditures. As part of anti-crisis measures in 2009-2010. long-term commitments were made (a particularly significant increase in pension payments), which made it difficult to reduce spending after the crisis.

Since 2004, three versions of the budget rules have been successively replaced in Russia. Their effectiveness should have manifested itself in the long term, but in practice the budget rules were reviewed on average every two to three years, which indicates the instability and unsuitability of their design for solving the problems they face. Moreover, it should be taken into account that the operation of budget rules, like most economic policy measures, has a “threshold” character: they give a positive effect if the quality of institutions is sufficiently high (a qualified and non-corrupt state apparatus, transparency of government actions, consistency and responsibility in the implementation of adopted managerial decisions, etc.) and do not bring results (or give a negative effect) at a low level (Kudrin, Sergienko, 2011, p. 10-11).

Budget Rule: Version 4.0

The current phase of the long-term business cycle raises the urgency of an expansionary fiscal policy, while worsening terms of trade and an autonomous sustained decline in oil and gas revenues make it necessary to balance the budget at lower revenue levels. The answer to these challenges can be a transition to a flexible and counter-cyclical budget rule, as well as a change in approaches to the formation and spending of sovereign funds.

The new budget rule applied in drafting the draft law on the federal budget for 2018-2020 comes down to defining the maximum volume of federal budget expenditures as the sum
three components: 1) the base volume of oil and gas revenues, calculated at an oil price of $40 per 1 bbl. the Urals brand in 2017 prices (starting from 2018 is subject to annual indexation by 2%), and the base price for exported gas linked to it; 2) the volume of non-oil and gas revenues calculated in accordance with the basic version of the medium-term forecast of the socio-economic development of the Russian Federation; 3) debt service costs. For the transition period in 2018, the volume of expenditures was formed taking into account the transitional provisions of the budget rules based on restrictions on the volume of the primary structural deficit (with the price of Urals oil at $40 per barrel in 2017 prices) within 1% of GDP. At the same time, if the amount of funds of the NWF (combined sovereign fund) as of January 1 of the first (and/or second) year of the planning period falls below 5% of GDP, then the maximum amount of reserve assets used to cover the deficits of the federal budget and the budget of the Pension Fund of the Russian Federation cannot exceed 1 % of GDP, on the basis of which the marginal volume of expenditures is adjusted. The parameters of federal budget expenditures, determined on the basis of the new design of budget rules, are presented in Table 1.

Revenues as a share of GDP are steadily declining, mainly due to lower oil and gas revenues. This long-term trend is determined by changing terms of trade, worsening production conditions and, as a result, a decrease in the share of the oil and gas sector in GDP. As a result, the federal budget will receive less than 1.2% of GDP over three years.

With such dynamics of budget revenues, the application of the new budget rules will lead to a rapid reduction in spending: from the current 18.1% of GDP to 15.9% of GDP already in 2019. turn in the social sphere. According to our estimates, the optimization of federal budget spending on defense, law and order, public administration, and the reduction of subsidies in the real sector together can ensure a reduction in spending in the next two to three years in the amount of no more than 1.0% of GDP, therefore, it is planned to save the same amount on in the social sphere, primarily on pension provision (which, without a pension reform, will lead to a decrease in the replacement rate).

It is obvious that the new design of budget rules, by imposing excessively strict restrictions on the volume of federal budget expenditures, will not make it possible to ensure the necessary volume of expenditures for economic development and financing of structural reforms. However, budgetary rules are only an instrument of budgetary policy and should not interfere with the solution of the tasks facing it.

Therefore, we believe that already within the next year's budget cycle, it is possible to somewhat soften the definition of the base oil price in the rule: increase its value from $40 to $45 per barrel. at constant prices. As shown in Figure 1, oil price forecasts from leading agencies and international organizations are generally more optimistic than $40 or $45/bbl. Urals brand: both prices are closer to the lower limit of the currently existing consensus forecast of international organizations regarding oil prices for the coming years ($50-60/bbl).

Against the background of the dynamics of oil prices over the past 10-15 years, the difference between 40 and 45 dollars per barrel. does not seem significant: both prices are significantly below the average multi-year values, which over the past 10 years amounted to 84 dollars per barrel. and for 15 years - 70 dollars per barrel. Therefore, with the "weakening" of the budget rule - an increase in the base price of oil to 45 dollars per barrel. - the restriction will remain sufficiently severe, while not hindering the achievement of long-term sustainable development goals.

Another temporary easing in the design of the budget rule proposed by the Russian Ministry of Finance could be the rule on the admissibility of increasing the marginal spending on the volume of privatization proceeds in the amount of up to 0.5% of GDP. Proceeds from privatization is an underestimated resource, since it allows to attract excess free financial resources from the national economy or from abroad, promote denationalization (increasing competitiveness and abandoning the practice of state paternalism), and be an additional source of temporary funding for the federal budget deficit.

The implementation of these two changes in the new budget rule will make it possible to reduce federal budget expenditures more smoothly and thus partially retain room for budget maneuver.
in favor of productive areas of spending budget funds (for more details, see Kudrin, Sokolov, 2017). Estimated fiscal implications of the proposed changes to the fiscal rule are presented in Table 2 using more conservative (realistic) estimates of macroeconomic conditions for the period 2019-2020.

However, even a "softened" version of the fiscal rules is not able to fully solve the problem of reducing budget spending in the medium term, not to mention a longer time horizon. In order to keep the extended government’s spending at a level of at least 34% of GDP in the long term (enough to implement structural reforms and create conditions for long-term economic growth at a rate of about 3.5-4.0% annually; see Kudrin, Sokolov, 2017) already in In the near future, it is necessary to implement measures that lead to the receipt of additional revenues to the budget. In particular, it is necessary to complete the tax maneuver in the oil and gas sector launched in 2015, which provides for a reduction to zero of the export duty on oil and petroleum products with a simultaneous increase in the severance tax (this maneuver will ensure additional oil and gas budget revenues at the level of 0.3-0.5 % of GDP in 2019-2020, respectively); carry out systematic work to abolish inefficient tax incentives that do not meet the current goals of the state (this measure is capable of providing additional revenues at the level of 0.2-0.3% of GDP annually). These measures, together with the optimization of unproductive expenditures, will make it possible to form a source of financing for structural adjustment in the economy and the social sphere through budgetary instruments.

However, the version of the fiscal rule under consideration (in the official or "softened" version) has significant internal shortcomings that adversely affect the sustainability of its application.
The main problem is the lack flexibility this construction of the rule: at an oil price of 55-60 dollars per barrel. By 2020, about 10% of GDP will accumulate in the united sovereign fund and there will be pressure to revise the base price (as in 2005). In such circumstances, it is extremely difficult to complete the budget maneuver by further optimizing non-productive spending (“power”, for social security).

Equally important is the problem of the lack of a countercyclical nature of the action of the rule. Since non-oil and gas revenues are linked to GDP and behave pro-cyclically, debt service costs are acyclic, and oil and gas revenues are correlated with the price of oil (which is exogenous with respect to the structural cycle of the Russian economy), none of the components of the rule does not adequately take into account the cyclical nature of the Russian economy. economy, and therefore does not provide support for the economy in the downturn phase (replacing the contraction of market demand) and does not restrain growth in the upswing phase (avoiding excessive overheating of the economy).

Another problem is that the rule is focused on smoothing only oil and gas revenue shocks caused by changes in oil prices. However, world experience shows that non-oil and gas revenues can also be susceptible to oil price shocks (mainly income tax), as well as have a cyclical component that is not related to the oil price. Thus, the fiscal rule should take into account, firstly, the possibility of shocks other than changes in oil prices, and secondly, all taxes susceptible to oil price shocks.

The fourth problem: with such a construction of the budget rule public debt service costs must always be covered by new borrowing. This tactic does not carry fiscal risks as long as the borrowing rate does not average higher than GDP growth in the long term, and in the short term such rate hikes are not expected, which could effectively limit access to debt financing. Note that both assumptions are not quite acceptable in Russian conditions. Such an approach is possible at a level of public debt servicing costs of up to 1% of GDP per year, however, as public debt grows and GDP growth rates lag behind the real borrowing rate (which has been observed in recent years), the amount of costs for servicing it will self-reproduce in the long run. perspective (20-30 years) can lead to the formation of a "snowball".

International experience in the application of fiscal rules

Budget rules traditionally solve the following tasks:

• maintaining the debt sustainability of countries by limiting the amount of debt and controlling the dynamics of its level;
• ensuring a balanced budget (zero deficit), including taking into account the cyclical nature of development and dependence on raw materials;
• prevention of unreasonable increase in expenses.

There are several types of budget rules, based on the tasks they solve.

Debt rules, setting a limit on the level of public debt as a percentage of GDP. For example, in the EU countries, the maximum level of public debt is set at 60% of GDP. Outside the OECD, there are similar restrictions: for example, in Pakistan, since 2005, a rule has been in place according to which the ratio of public debt to GDP must be reduced to 60%, for which the debt must be reduced by at least 2.5% of GDP annually.

The problem with this type of rule is not only the difficulty of choosing a reasonable debt target, but also that the introduction of a public debt ceiling (with or without a ceiling on the state budget deficit) is neither a necessary nor a sufficient condition for ensuring fiscal sustainability. The public debt ceiling is sensitive to macroeconomic changes (changes in long-term economic growth rates, permanent shocks in the balance of the state budget's primary balance, etc.), which means that when it is fixed, there is a risk that this threshold may be higher than the maximum allowable level of the state debt.

Budget balance rules, establishing the following requirements: ensure a balanced budget (zero deficit); not to exceed the established limit value of the budget deficit; achieve a budget surplus, at least in the prescribed amount. Such rules are usually expressed as a percentage of GDP. The disadvantage of this type of rule is that fiscal policy can be pro-cyclical. It can be overcome by moving to a balanced structural budget balance adapted to the phase of the economic cycle. These are the so-called "second generation" budget balance rules, which use targets cleared of cyclicality (focus on achieving a cyclically adjusted - depending on the stage of the economic cycle - balance; the use by raw material exporting countries of a structural balance adjusted for fluctuations in the levels of income from the sale of commodities; the use of the non-commodity budget balance). Typically, such rules aim to achieve fiscal sustainability while providing the necessary flexibility to respond to shocks in the economy.

The most interesting is the experience of Switzerland, which introduced a rule to maintain a balanced structural budget after the rapid growth of public debt in the 1990s (up to 50% of GDP) (Geier, 2011). The rule came into effect in 2003 and consists in the fact that budget expenditures must correspond to its cyclically adjusted revenues. The latter are calculated on the basis of the forecast of real budget revenues (Tt) and the indicator of the phase of the economic cycle (k). This indicator represents the ratio of real potential GDP estimated using the Hodrick-Prescott filter (Y*) and the actual projected real GDP (Y): k = Y*/Y. Thus, the government's maximum allowable spending is k ×  Tt. Note that in the rise phase (k< 1) это правило позволяет ограничивать рост расходов бюджета, придавая бюджетной политике контрциклический характер (относительное снижение расходов в период подъема экономики и их рост в период спада). После исполнения бюджета в соответствии с установленным планом остаток или недостаток средств учитывается на специальном счете (compensation account). Если счет отрицательный, то величина отрицательного остатка должна приниматься во внимание при определении расходов следующего периода. Если дефицит превышает 6% расходов бюджета, то он должен быть ликвидирован в течение ближайших трех лет за счет снижения предельного объема расходов бюджета. Под действие правила подпадают все бюджетные расходы, включая инвестиционные. Само бюджетное правило закреплено в конституции Швейцарии и не может быть изменено без проведения всеобщего голосования. В исключительных случаях конституция позволяет повышать потолок расходов, например, при продолжительной и глубокой рецессии экономики. При этом избыточные расходы отражаются на специальном счете (amortization account) и должны быть компенсированы в течение шести лет.

We emphasize that countries that have introduced more sophisticated (combined, "second generation") rules (Germany, Switzerland, Denmark, Chile) than a simple link to the level of public debt (without or along with the level of public budget deficits) did not have debt problems. after the global crisis of 2008-2009. Actually, these countries use rules based on the adjustment of the primary budget balance to changes in the level of public debt.

Budget spending rules, which set constant limits on total, primary (non-interest), or current spending in absolute terms, as spending growth rates, or as a percentage of GDP. Their disadvantage is that the effect of this type of rule is short-term in nature. Expenditure growth rates are set for one or several years ahead, and no long-term targets for budget policy are set.

An IMF review (Cordes et al., 2015) shows that the effectiveness of rules of this kind is high if the rule is enshrined in law or an agreement by the ruling coalition. Typically, such rules are associated with spending control practices, counter-cyclical fiscal policies, and strong fiscal discipline. For this type of rule, the IMF recommends that there be sufficient flexibility to respond to shocks (contingency provisioning and contingency planning) while ensuring that “the rules are easy to implement, communicate to the general public, and also monitoring” (IMF, 2009, p. 4).

In developed countries, restrictions on the growth of real budget expenditures are set more often than in developing ones. They are usually established in the form of a law and relate to the budget of the central government. At the same time, certain items of expenses are often not taken into account when setting the ceiling of expenses. For example, in France, Finland, Spain, Japan, the costs of paying
interest on public debt, in Croatia, Ecuador and Peru - capital spending, in Israel and Peru - national security spending.

Almost all countries exporting natural resources have budget rules based on the intertemporal redistribution of export revenues through the mechanism of stabilization funds (Drobyshevsky, Sinelnikov-Murylev, 2012, p. 7). The bottleneck for rules based on price pegging as an indicator of changes in the primary balance is the quality of forecasting their dynamics: oil prices depend on many factors, so the “random walk” method is used to predict their future level (Valdes, Engel, 2000) .

The experience of applying budgetary rules has also shown that their implementation is characterized by extreme instability: they were either canceled during economic downturns (Bulgaria, Argentina, Belgium, Spain), or they could not survive at least one political cycle (Great Britain, Canada). Clearly, it is unlikely that fiscal rules can be successfully used to maintain fiscal sustainability without changing other fiscal institutions.

Approaches and requirements when choosing a budget rule

The choice of a fiscal rule for any country, including Russia, depends on a number of factors. First, the nature of the impact of government spending on long-term economic growth in a given country matters. Debt financing in imperfect capital markets can lead to the effect of crowding out private spending by public spending due to rising real interest rates. Tax financing is accompanied by distortions in incentives for economic agents, as a result, taxpayers lose more than the amount of taxes paid (due to the deterioration of the consumption pattern). The welfare gain is that government spending can generate positive externalities for the economy as a whole. Therefore, in the development of the ideas of R. Barro (Barro, 1990) and D. Aschauer (Aschauer, 1989), we can talk about restructuring the structure of budget expenditures in favor of areas that provide positive external effects that cover the losses caused by the diversion of resources to finance them. In the works: Kudrin, Sokolov, 2017 and Shagas, Perevyshin, 2013, estimates are obtained, according to which in Russia it is necessary not so much to reduce the level of public spending (this should be taken into account when designing budget rules), but to redistribute in favor of productive budget items (particularly infrastructure and human capital).

Second, the ability of fiscal policy to smooth out
cycle. Here, the Russian economy, in contrast to developed countries, is characterized by more limited access to borrowed funds for both business and the population. The stronger this kind of credit constraint, the more government spending cuts during an economic crisis can increase the depth of the recession. A study by M. Mammadli (2015) showed that on Russian data for 2005-2015. the permanent income hypothesis is not confirmed: Russians react asymmetrically to shocks to disposable income, reducing consumption more during periods of recession than increasing during periods of recovery. Thus, stimulating the Russian economy through public spending may not be effective enough, but a sharp reduction in spending is likely to exacerbate the downturn. In such a situation, the existence of budget rules that allow financing of budget expenditures even when state budget revenues fall (which is inevitable in an economic downturn) makes it possible to avoid a deepening recession. Therefore, in practice it is advisable to use rules based on the structural balance of the state budget. The peculiarity of the Russian economy is that in the context of a recession, not only the private sector, but also the public sector may face restrictions in access to borrowed funds. Therefore, it is advisable for our country to create a "safety cushion" by accumulating funds during the rise and spending during the recession.

Thirdly, the Russian economy and the state budget are largely dependent on revenues from non-renewable (depletable) natural resources, in particular oil. At the same time, Russia is among the countries with an average importance of natural resource rent in the economy (Fig. 2): the share of exports of natural resources in GDP for Russia is at the level of Norway and Chile (fluctuates around 20%), which is significantly lower than for the countries of the Persian bay (from 30 to 50%). Thus, the budget rule should not only be tied to the use of natural resource rent, but also take into account fluctuations in tax revenues from the taxation of non-primary sectors of the economy.

Taking into account international and domestic experience in the use of budget rules, it seems that, taking into account all the features of Russia and the long-term challenges facing it, the design of modern budget rules should meet the following requirements (Gurvich, Sokolov, 2016):

• maintaining a stable (relatively constant) level of federal budget spending, regardless of the volatility of oil prices and the phase of long-term commodity cycles;
• counter-cyclical nature of actions based on appropriate flexibility and proportionality in response to ongoing changes in the economy;
• stability and adaptability to any internal and external influences, which allows us to count on the long-term effect of fiscal rules.

Proposed Modification of Fiscal Rules

Based on the foregoing, we believe that for Russia the most acceptable design of the budget rule is based on a structural balance (a budget balanced on a cyclical basis).
) with the following characteristics.

1. Accounting for structural non-oil and gas revenues. Since Russia is among the countries with an average importance of natural resource rent for the economy, it is necessary to link the parameters of the fiscal rule not only to resource prices, but also to indicators that correlate with the bases of tax revenues from the non-oil and gas sector. Such experience, in particular, has been accumulated in Chile, where, along with linking to the price of copper and molybdenum, the impact of GDP dynamics on all tax and non-tax revenues to the budget is taken into account.
To calculate structural non-oil and gas revenues, special statistical techniques are used (as a rule, the Hodrick-Prescott filter) of splitting GDP into cyclical and structural components. It is the structural component of GDP that is used as an indicator to which tax and non-tax revenues are tied (for Russia we are talking about non-oil and gas revenues), also called “structural revenues”. Therefore, structural non-oil and gas revenues (SNIR) are proposed to be calculated using the formula:

where: forecast NRR - the amount of non-oil and gas revenues with forecast GDP; projected structural GDP - projected GDP adjusted for cyclical fluctuations.

In the event of a downturn, projected non-oil and gas revenues could be less than calculated structural non-oil and gas revenues and, therefore, under the fiscal rule, it would be necessary to build up the overall deficit to countercyclically finance spending obligations. On the contrary, in a situation of economic recovery, the positive difference (surplus) between forecast and structural non-oil and gas revenues should be used to pay off previously accumulated debt.

2. Calculation of the “cut-off price” (base price) and determination of oil and gas revenues. World experience shows that one of two approaches is usually used: by average prices for the previous period (for example, in Mexico, Mongolia) or according to expert estimates (for example, in Chile). The main problem with the calculation at average prices is that in case of a sharp and significant drop in the price of oil, it will lead to an overestimation of the value (which was observed in Russia in 2014-2016). In turn, expert assessments can be subject to strong external pressure: conservative forecasts of the “cut-off price” are more acceptable for the financial authority, while line ministries are interested in higher costs, and therefore in higher (optimistic) estimates of the base price. The proposed compromise between the two approaches is the use of expert estimates of the “cut-off price” for the period of budget planning in the presence of a formal upper limit at the level of the long-term average oil price (for example, for a 30-year period; see: Gurvich, Sokolov, 2016). For spending in the planned financial year, only oil and gas revenues calculated at the “cut-off price” can be used. Income above this price is channeled into reserve sovereign assets. If the actual oil price turns out to be lower than the “cut-off price”, then financing of expenditure obligations will be carried out using previously accumulated reserves.

3. Ability to use debt financing and public debt service. In addition to cyclical smoothing, fiscal policy solves the problem of promoting long-term economic growth. As a rule, the results of productive expenditures are delayed in time, so it is advisable to finance these expenditures with debt, so that future generations, while benefiting from these expenditures, also bear the burden of repaying it. In view of the foregoing, and at a relatively safe level of public debt for financial stability, it seems possible to temporarily include in the rules for calculating marginal costs as a separate item the costs of servicing public debt - in addition to those arising in connection with maintaining the level of federal budget expenditures in an amount that is total equal to the value of structural non-oil and gas revenues and oil and gas revenues at the "cut-off price".

Moreover, since the amount of spending on servicing the accumulated public debt depends on the decisions taken earlier, it is inappropriate to limit the execution of these obligations through strict fiscal rules. However, in order to prevent the “snowball” effect, it is justified to keep the cost of servicing the public debt within the range, according to our estimates, up to 1.0-1.2% of GDP.
by pursuing a debt policy that involves the placement of government bonds with the lowest possible yield (on the most favorable terms for borrowing). The planned expenditures of the federal budget will be limited from above by the sum of structural non-oil and gas revenues and oil and gas revenues at the “cut-off price” level. At the same time, for the transition period (at least until the end of the budget maneuver; see: Kudrin, Sokolov, 2017), marginal spending can be increased by the amount of spending on servicing the public debt.

Additionally, to give the rules more flexibility to adapt the budget to short-term macroeconomic and financial shocks, two options can be envisaged:

• the right of the government in case of extreme shocks (reduction of the real value of federal budget revenues, for example, by at least 10-15% within one year) to increase the structural deficit in the short term (for one to two years);
• impose a ceiling on the annual spending of sovereign reserves.

For example, it is possible to impose a limit on the number of years for which accumulated liquid sovereign assets should be enough to finance spending obligations in the event of a medium-term drop in oil prices (for example, for three years - the federal budget preparation period), or to introduce a limit on annual spending of no more than 30% balances in the Russian Federation at the beginning of each year.

The transition to a modified version of fiscal rules should be carried out in stages, taking into account the size of accumulated sovereign reserves, the volume of public debt and, most importantly, the completeness of the budget and tax maneuvers mentioned above.

For the period 2019-2020 the already adopted budget rule, “softened” by raising the base oil price to $45/bbl, could be implemented. (in constant prices) and an additional increase in the marginal cost calculated according to the rule by the amount of proceeds from privatization in the amount of up to 0.5% of GDP.

Starting from 2021, it is possible to abandon the “privatization allowance” to expenditures and move to a zero primary balance, that is, federal budget expenditures (both planned and actual) should be limited to the sum of structural (cleared from cyclical fluctuations in economic development) non-oil and gas revenues and oil and gas revenues at the level of the "cut-off price", as well as the cost of servicing the public debt (no more than 1% of GDP).

Subsequently (tentatively, after 2024), in order to ensure a long-term balance of the federal budget, fiscal rules can be tightened by moving to a zero overall deficit (refusal to take into account the amount of public debt servicing in marginal spending) within a five-year period. If there is a shortfall in revenue or the need to increase spending to countercyclically support the economy, you can temporarily increase the deficit against the obligation to repay it over the next four years.

Empirical Test of the Relevance of the Modified Fiscal Rule

Let us analyze the application of the proposed fiscal rule for Russia on retrospective data for 2007-2016. The choice of this period is due to two reasons: on the one hand, over the past decade, one can observe all three successive versions of the budget rules, as well as periods of suspension of their use; on the other hand, discrete decisions of the Government of the Russian Federation on the early repayment of external debt at the expense of accumulated reserves (2005-2006) do not apply to the period under review and do not introduce distortions into the calculations under the proposed budget rule.

Calculation of oil and gas revenues. For the proposed version of the budget rule, the "cut-off price" is set at the level of the minimum of two estimates - the average price of Urals oil for the previous 30 years and the price based on the consensus forecast according to the estimates of the World Bank and the IMF. As can be seen in Figure 3, the use of a moving average when estimating the long-term (for the previous 30-year period) oil price leads to a smoothing of short-term volatility in the dynamics of oil prices and thus prevents sharp fluctuations in budget expenditures following market changes in the flow of oil and gas revenues. Figure 4 shows that the dynamics of oil and gas revenues calculated according to the proposed rule is less volatile than the forecast and actual ones.

Calculation of non-oil and gas revenues. To determine non-oil and gas revenues according to the proposed budget rule, it is necessary to know the levels of forecast GDP and structural GDP for the planned year.

The decomposition of GDP is carried out using the Hodrick-Prescott filter (Hodrick, Prescott, 1997) according to the following formula:

where: y t - real GDP; z t - structural component of GDP; β - smoothing parameter (for annual data it is recommended to take at the level of 100; see: Ravn, Uhlig, 2002).

Among the shortcomings of the Hodrick-Prescott filter, we note that it “adjusts” the values ​​of the structural component to the latest values ​​in the observation period under consideration. Because of this, when calculating structural GDP for the corresponding financial year, it is desirable to use forecast data on GDP for a three to five year perspective, but strictly not less than the next two years. Otherwise, the Hodrick-Prescott filter will automatically equate structural GDP and projected GDP for the target year.

In general, taking into account the specifics of the Hodrick-Prescott filter, for a more accurate selection of the structural component of GDP, it is necessary to use the longest possible time series. Moreover, within this series there should be periods of economic recession and recovery. The available alternative GDP decomposition methods are also not without drawbacks (asymmetry of cyclical fluctuations, failure to detect structural shifts, etc.; see: Enders and Walter, 2015). Illustratively, Figure 5 demonstrates the selection of the structural component of GDP by two methods - based on the Hodrick-Prescott filter and using a linear trend. As can be seen, the GDP decomposition technique using the Hodrick-Prescott filter is better than other approaches, in particular, the linear trend, clears the structural component from cyclical fluctuations.

Note that the accuracy of estimates of non-oil and gas revenues using the proposed approach (based on the Hodrick-Prescott filter) depends on the quality of forecasting both GDP and non-oil and gas volumes.
oil and gas revenues.

Figure 6 shows the dynamics of the forecast (included in the first versions of the law on the federal budget for the corresponding year) and actual values ​​of non-oil and gas revenues. The largest discrepancies in the volume of non-oil and gas revenues in the period under review were recorded in 2008-2011. (crisis and subsequent exit from it), which was associated either with a noticeable underestimation or overestimation of GDP growth rates in the context of sharp macroeconomic shocks.

Figure 7 shows that inaccuracies (miscalculations) in forecasting lead to a shift in the estimate of structural non-oil and gas revenues calculated on the basis of the approach proposed under the budget rule. Thus, non-oil and gas revenues calculated according to the proposed rule based on actual values non-oil and gas revenues are relatively stable and in constant prices fluctuate slightly around the level of 8.0 trillion rubles. (in 2016 prices). At the same time, structural non-oil and gas revenues calculated according to forecast values, are highly volatile and procyclical, which contradicts the very logic of the proposed rule (the need to maintain a relatively stable level of expenditures in constant prices and carry out countercyclical budgetary regulation). Thus, to ensure the required effectiveness of the proposed fiscal rule, special attention should be paid to improving the quality of medium-term macroeconomic and budgetary forecasting.

Calculation of the total cost ceiling. The overall spending ceiling for the proposed version of the rule was calculated as the sum of projected structural non-oil and gas revenues, oil and gas revenues at the cut-off price, and public debt service costs (Figure 8). The proposed rule will ensure a relatively stable level of federal budget spending, provided that macroeconomic and budgetary forecasting is of adequate quality, especially in terms of determining the short-term dynamics of oil prices and the impact of shocks on the economy and budget.

By switching to the proposed rule from the second half of the 2000s, it would be possible to prevent or at least contain the growth of federal budget expenditures, the volume of which has not returned to the pre-crisis level (about 14.0 trillion rubles in 2016 prices, or 16 ,3% of GDP) after overcoming the consequences of the 2008-2009 crisis. As a result, planned expenditures since 2010 have consistently exceeded the expenditure ceilings calculated according to the rule - as a result of the adoption by the Government of the Russian Federation of discrete decisions on the implementation of anti-crisis measures in 2008-2010. and 2015-2016, as well as due to steadily increasing social obligations and an increase in “power” spending. This means that the risks of fiscal imbalance have been steadily accumulating since the early 2010s. In turn, the proposed budget rule makes it possible to more accurately take into account the cyclical nature of economic development and ensure a better balance of the federal budget due to adaptation to new macroeconomic conditions (the crisis manifestations of 2008-2010 and 2014-2016) without prejudice to the budget's implementation of its countercyclical function.

Calculation of surplus/deficit levels, public debt and sovereign wealth funds. The primary surplus was calculated as the difference between actual income and non-interest expenses (in the first case, determined according to the proposed budget rules, and in the second - actually established). As can be seen in Figure 9, the proposed fiscal rule makes it possible to more successfully sterilize market revenues during periods of relatively high prices (2007-2014) and provide additional fiscal support during periods of low oil prices (2016), thereby ensuring the countercyclical nature of the fiscal policies and thus greater flexibility than previous versions of the fiscal rules.

An analysis of the dynamics of the balances of accumulated sovereign reserves and the level of public debt of the federal budget (Fig. 10) shows that this level, according to the proposed rule, would be noticeably lower than the actual one. At the same time, the size of sovereign reserves would steadily accumulate throughout the period under review and reach 25% of GDP.

Our analysis showed that the risks to fiscal sustainability have increased in recent years. When using the version of the budget rule proposed in the article, it can be seen that since 2010 budget obligations have exceeded the allowable levels in terms of ensuring budget balance. At the same time, a gradual modification of the fiscal rule (with a transitional period) will make it possible to better adapt the budget to the requirements of financing structural transformations in the economy while maintaining control over long-term fiscal sustainability. It is important to understand that the budget rule should not so much provide for limiting expenditures as create opportunities for their redistribution from unproductive to productive items while maintaining the required balance. Given the steady decline in the share of the oil and gas sector and shocks to the economy that are not related to changes in the oil price, the proposed rule will allow for a greater smoothing of spending dynamics, reducing public debt accumulation and increasing sovereign reserves than previous versions.
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1 According to the IMF, in 2015 more than 90 countries applied at least one fiscal rule (IMF fiscal rules dataset. http://www.imf.org/external/datamapper/fiscalrules/map/map.htm)

2 See: Federal Law No. 184-FZ dated December 23, 2003 “On Amendments to the Budget Code of the Russian Federation in Part of the Creation of the Stabilization Fund of the Russian
Federation".

3 Federal Law No. 127-FZ of October 12, 2005 “On Amendments to Article 96.1 of the Budget Code of the Russian Federation”.

4 Explanatory Note to the Draft Federal Law “On Amendments to the Budget Code of the Russian Federation and Certain Legislative Acts of the Russian Federation Regarding the Use of Oil and Gas Revenues of the Federal Budget”.

5 See: Federal Laws No. 314-FZ of December 17, 2009 “On Amendments to Certain Legislative Acts of the Russian Federation in Connection with the Federal Law “On the Federal Budget for 2010 and the Planning Period of 2011 and 2012”” and September 30, 2010 No. 245-FZ “On Amendments to the Budget Code of the Russian Federation and Other Legislative Acts of the Russian Federation”.

10 In recent years, the price of Urals oil traded with a spread of up to $4 to the price of Brent oil, that is, these prices differed by 1-2%.

11 It is used in Chile, Switzerland, Germany, Great Britain and assumes that during a recession, the public debt grows, and during the rise it is extinguished by increased budget revenues.

12 The calculation is made for the construction of the fiscal rule based on the structural primary balance (version recommended for use from 2021)

13 Calculations based on data on the total volume of accumulated reserves, that is, the total balance of funds in the Reserve Fund and the National Welfare Fund in the period under review.

References / References

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• Drobyshevsky S., Sinelnikov-Murylev S. (2012). Macroeconomic prerequisites for the implementation of a new growth model // Voprosy ekonomiki. No. 9. S. 4-24.
• Kudrin A. (2006). Mechanisms of formation of the non-oil and gas balance of the budget of Russia // Questions of Economics. No. 8. S. 4-16.
• Kudrin A. (2011). The budget for the modernization of the Russian economy // Finance. No. 1. S. 3-10.
• Kudrin A., Sergienko O. (2011). Consequences of the crisis and prospects for the socio-economic development of Russia // Questions of Economics. No. 3. S. 4-19.
• Kudrin A., Sokolov I. (2017). Budget maneuver and structural restructuring of the Russian economy // Questions of Economics. No. 9. S. 5-27.
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• Shagas N., Perevyshin Yu. (2013). Econometric study of economic growth factors (modeling the impact of government spending on GDP dynamics). Preprint RANEPA. http://profil.ranepa.ru/docs/pubs/p176/546a3ce9b526f.pdf
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• Barro R. J. (1990). Government spending in a simple model of endogenous growth. Journal of Political Economy, Vol. 98, no. 5, pp. 103-126.
• Cordes T., Kinda T., Muthoora P., Weber An. (2015). Expenditure rules: Effective tools for sound fiscal policy? IMF Working Paper, no. WP/15/29.
• Geier A. (2011). The debt brake - The Swiss fiscal rule at the federal level. Working Paper of the FFA, no. fifteen.
• Enders R., Walter D. (2015). Trends and univariate decompositions. In: Applied econometric time series (3rd ed.). New York: Wiley, pp. 247-270.
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• IMF (2009). Fiscal rules: Anchoring expectations for sustainable public finances. Washington DC.
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In the total profit of the economy, the share of primary industries has significantly increased: now it is close to 40%, and by the end of the year, according to expert forecasts, it may well reach 50%. The resource curse has not been overcome. The budget rule adopted by the government is pushing the Russian economy into ultimate oil slavery, experts say. The economy is being artificially drained of blood, leaving no sources for diversification and development. And the authorities are trying to make the population and business such a “source”. The entrepreneurial depression of the manufacturing industries has already become chronic.

According to the latest data from Rosstat, the share of unprofitable enterprises in Russia in January-April amounted to 34.2%. According to the director of the analytical department of Loko-Invest, Kirill Tremasov (former head of the department of the Ministry of Economic Development), this is "the maximum in the last four years."

If you look at the sectoral breakdown, then the largest share of unprofitable enterprises (over 40%) is recorded in such sectors as the provision of electricity, gas and steam; mining; transportation and storage; scientific and technical activity. In the water supply sector, it is almost close to 50%. Against this background, the manufacturing sector seems to look good: the share of unprofitable enterprises is 33%.

However, at the same time, it is the primary industries that account for the main contribution to the overall profit of the economy. In January-April, the total balanced financial result of enterprises (excluding small businesses, banks, insurance companies and government agencies) amounted to more than 3.5 trillion rubles. - by this amount, the total profit exceeded the total loss.

About 1.3 trillion rubles. of this amount falls on the extractive sector, which increased its result by 61% compared to the same period last year. Thus, the share of the extractive sector became the largest, amounting to 37%. And the manufacturing industry worsened its result: the decline was almost 4%. This sector accounted for only 849 billion rubles, or 24% of the total financial result.

According to Tremasov's forecast, by the end of the year, the share of primary industries in the economy's profits may well reach 50%. Note that this rarely happens, but such a scenario cannot be called absolutely fantastic. For example, in 2014, in the net financial result of organizations, the extractive sector accounted for almost 50%, while the manufacturing sector accounted for only a quarter.

Now, against the background of rising oil prices and such financial results of companies, the budget rule adopted by the government “is moving us by leaps and bounds towards a resource-based economy,” Tremasov warns.

Earlier, the financial authorities have already explained that the budget rule with a cut-off price of about $40 per barrel helps smooth out fluctuations in the exchange rate associated with the external environment. Additional oil and gas revenues received due to the cost of oil in excess of the cut-off price are directed to reserves - for this purpose, the Ministry of Finance buys foreign currency. True, such a rule led to the fact that the Russian currency was artificially devalued against the dollar even against the backdrop of rising oil prices (see).

For several years in a row, the manufacturing industries in Russia have been in a state of entrepreneurial depression - this is recorded by Rosstat. Now the situation is deteriorating again. So, in May 2018, the index of entrepreneurial confidence in manufacturing industries in the Russian Federation amounted to -3.5% (it was almost the same in June), although in December 2017 the index was -1.1%. That is, it got worse. The minus indicates the predominance of negative assessments of entrepreneurs, the data are given with the exception of the seasonal factor.

Artificial bleeding of the economy with the help of the fiscal rule, when additional oil and gas revenues are withdrawn from the economy and sent to reserves, does not contribute to modernization or diversification.

But, even having withdrawn the “extra” oil and gas revenues from the economy, the authorities could still use this money in a different way: for example, by directing it to balance the pension system. By the way, the National Wealth Fund (NWF) was created for this. It could become an analogue of the Norwegian state fund. But the NWF not only cannot boast of the same profitability as the Norwegian state fund (see, for example,), it is also being spent more and more often on various projects not related to the pension system. Moreover, it is spent, as checks show, not always efficiently (see "NG" from;).

Experts interviewed by NG admit that by the end of the year the share of primary industries in the total profit of the economy could reach 50%.

“The situation that has developed with the financial results of enterprises is currently opportunistic. The current trend is determined by the internal rise in prices for almost all types of raw materials. First of all, for motor fuel. With a relatively stable ruble, this leads to increased profitability in the commodity sectors and increased costs in the rest of the economy. The share of primary industries in profits could theoretically grow to 50%, subject to further growth in oil prices,” explains Alexander Shirov, deputy director of the Institute for Economic Forecasting of the Russian Academy of Sciences.

“In general, there have been no significant changes in the structure of the Russian economy in recent years,” the expert continues. “Changes require an increase in the competitiveness of basic industries, which is possible only with an increase in investment activity.”

According to Shirov, now the budget rule limits the strengthening of the ruble, "restrains the growth of budget expenditures of an opportunistic nature", "ensures an increase in liquidity in the financial system." At the same time, "additional budget revenues are not used to modernize the economy," the expert adds.

“The last two years have shown signs of the Dutch disease again. Thus, from 2015 to 2017, the export of crude oil increased by 15.4 million tons, which confirms the focus of the tax policy on stimulating resource exports,” notes Tamara Safonova, Associate Professor at the Higher School of Corporate Management of the Presidential Academy (RANEPA).

Despite the statements of the government, the country has not got rid of its dependence on raw materials. In the first quarter of 2018, the share of oil and gas revenues in the federal budget increased to 45.6%, for comparison: in the first quarter of 2017 it was 41.8%. Such data were cited in the May monitoring of the economic situation by specialists from the RANEPA and the Gaidar Institute.

According to the first vice-president of the Russian Union of Engineers, Ivan Andrievsky, it would be reasonable to soften the budget rule by raising the cut-off price and “direct more money to development now, instead of keeping the current bar and getting money through, for example, raising the value added tax which will certainly hit the manufacturing industries even harder.”

“The budget rule was originally created as a tool to get rid of dependence on raw materials on the principle “since now we don’t see this money sent to reserves, it means that they don’t exist, just as there is no dependence on raw materials.” But it's not. The share of oil and gas revenues is still growing in the budget structure. And the rejection of money directed to reserves leads to the fact that the government is forced to seek funds from the people and enterprises, increasing the burden on them, - draws attention to the director of the Institute of Actual Economics Nikita Isaev. “As a result, development is only slowed down.”

The new fiscal rule, which should restore strict approaches to the use of oil and gas revenues from 2020, will base on the price of oil at $40 per barrel and will take into account the cost of servicing the public debt

Finance Minister of the Russian Federation Anton Siluanov (Photo: TASS/Alexander Astafiev)

No primary deficiency

A new fiscal rule – a system of rules for the use of oil and gas revenues – will come into effect from 2020, set the base price of oil at $40 per barrel and will limit budget spending so that it must equal base income minus interest expenses on debt servicing, at the Moscow Financial forum on Friday Minister of Finance Anton Siluanov. “The preparation of the fiscal rule, which we believe is possible for implementation from 2020, will be that at $40 a barrel we should have a zero primary deficit. That is, all those debt service costs that we will be included in the budget expenditures will just amount to the deficit that we can afford,” Siluanov said, an RBC correspondent quoted him as saying.

In other words, under the new budget rule, the Ministry of Finance will calculate oil and gas revenues at a price of $40, add forecast non-oil and gas revenues to them (this amount will be considered basic income) and plan budget expenditures so that they are no higher than basic income, not counting interest payments on debt .

The new version of the fiscal rule will be the fourth since the introduction of such public finance management practices in 2004.

The old budget rule, which was in effect from 2013-2015, meant that marginal budget spending equaled basic income plus 1% of GDP. The new rule will replace this 1% with the amount of interest expense, which is now exactly within 1% of GDP. According to the law on the budget for 2016, interest expenses this year are planned at the level of 646 billion rubles, or 0.8% of GDP. The primary budget deficit (deficit excluding debt service costs) is planned at 2.2% of GDP, and the Ministry of Finance wants no primary deficit from 2020.

Why $40?

According to the old rule, the base oil price for calculating oil and gas revenues that can be used to finance budget expenditures was defined as the average annual price of Urals oil over a five-year period with an annual increase of this period by one year up to ten years (averaging over a ten-year period should have started from the budget 2018). Surplus profits (oil and gas revenues from the excess of real prices over the base) were transferred to sovereign funds. The rule worked on rising oil prices, but in 2015 the estimated price of oil under the budget rule was $96, while the actual price fell to $50. Therefore, the budget rule was suspended for 2016, and instead temporary rules were introduced (valid until February 1, 2017) that allow spending oil and gas revenues and savings from reserve funds to finance federal budget expenditures.

Now it is proposed to use the conservative price of $40 per barrel instead of the average oil price for previous years in the budget rule. Such a price is taken because it corresponds to the threshold of profitability of shale oil production in the world ($40-50), explains a high-ranking federal official familiar with the plans of the Ministry of Finance. According to him, soon the department wants to submit a legislative initiative to the new Duma in order to introduce a budget rule from 2020. A representative of the Ministry of Economic Development told RBC that the document had not been received by the ministry.

The average price of Urals in January-August 2016 was $39.36 per barrel, and in August it exceeded $40 per barrel ($43.9). If the new budget rule were in force now, the reserve fund could be replenished in August.

The issue of the cut-off price - $40 or closer to $50 - has yet to be discussed in the government, a federal official tells RBC. The Ministry of Finance proposes to index it annually for dollar inflation (in 2014 it was 1.6%, but in 2015 it was only 0.1%), a source close to the Ministry of Finance told RBC earlier. In general, the fall in oil prices and volatility in the foreign exchange market forced the Ministry of Finance to take a different look at the purpose of the budget rule. Its meaning should be broader than just an opportunity to stabilize state finances, the task is to “isolate the economy from the volatility of oil prices,” says a source in the financial and economic bloc of the government. We are talking about “so that the real effective exchange rate of the ruble does not fluctuate so much along with oil prices and relative prices in the economy, inflation, exchange rate conditions and everything that affects the profitability of companies in different sectors do not fluctuate so much.”

“We are guided by the fact that our budget deficit should gradually decrease by one percentage point annually. If we choose $40 as the cut-off price, then we come to a balanced budget by 2020; if we choose $50, we come to 2019. Depending on what the cut-off price will be, the moment will be determined when the budget rule will work fully, ”says an official from the financial and economic bloc.