Putin seeks investment as growth stalls

Russian President Vladimir Putin outlined on Thursday a broad foreign and domestic investment programme to boost slowing growth in the next three years.

Putin told a government meeting devoted to drafting budget frameworks through 2016 that Russia’s social security system depended on broader growth.

The Kremlin chief had this week conceded that growth would fall short of the year’s five-percent target and reach only 2.4 percent this year.

This tailspin has left Putin in a bind because it leaves the government short of the revenues need to fulfil the vast promises he dashed out during his 2012 presidential election run.

“All our objectives, including social ones, can only be met based on high rates of economic growth,” Putin said in televised remarks.

Putin said this growth can be achieved by attracting investment through favourable tax policies that made projects more lucrative than off shore bank accounts.

“We must create conditions that make it more attractive to investment in Russia than it is to hide them on some islands or spend them on luxury goods,” he stressed.

Putin also proposed improving “budget transparency” and streamling the tax system.

His comments were quickly followed by a warning from Finance Minister Anton Siluanov “that the budget for the next three years will be formed amid a reduction of the main parameters of social and economic development.”

Siluanov cautioned that Russia’s budget revenues would drop while expenditure remain the same — circumstances that made life difficult for the government.

“Therefore, we must use all our resources,” said Siluanov.

The finance minister proposed removing unnecessary tax loopholes and improving revenue collection.

He also suggested raising the dividend payments paid by Russian state-controlled companies.

Economic Development Minister Andrei Belousov stressed that Russia’s new strict budget rules meant that “spending cannot grow in terms of its share of gross domestic production.”