The IMF has offered Russia to tighten their belts – refrigerator and television will continue to fight – the commander in chief

The experts of the International Monetary Fund proposed to Russia to substantially reduce government spending, otherwise serious problems will arise. This is the conclusion they came at the end of May in consultation with the Central Bank and the government of Russia. The key measures proposed to increase the retirement age and cut benefits. This savings program can become a test of the strength of a new social contract proposed by the Kremlin after the “Russian spring».

In order to support the long-term solvency, Russia will have to cut government spending at 10% of GDP, – experts IMF. This is stated in the report of the Fund issued in early August. Moreover, such measures economists call even desirable, but inevitable. For now, the Russian economy have sharply negative effect just two factors – the continuing decline in oil prices and the Western sanctions.

At the same time the fund is considered a moderately optimistic scenario for the oil price forecasts for 2015 from the average annual Prices in US $ 61.5. per barrel. In 2016 it assumed even a slight rise in prices. Recall that in early August, the price of Brent barrel hovering around $ 50. The IMF has also argued that the direct and indirect damage caused by Western sanctions in the medium term could cost Russia as much as 9% of GDP, so in many ways the economic future of the country depends on how long they will last. The main effect will be long-term, as the effects of lack of investment and depreciation of fixed assets may be significantly extended in time.

One way or another, in order to maintain the solvency of Russia will have to take unpopular measures. The IMF These include raising the retirement age, cuts in all sorts of benefits and subsidies, increase in certain taxes. The report also said that the resumption of economic growth after 2016 will require radical fiscal reform. The government will have to abandon the practice of deficit budgets, on the contrary, you should regularly schedule a surplus at the level of 1-2% of GDP. Otherwise reserve funds may be depleted by 2020, and without such insurance, with limited external credit simply can not do.

Recall that the need to increase the retirement age in Russia is no longer negotiate the first year. However, beyond the proposals of some members of the economic bloc of the government and expert discussions did not get. Whenever such initiatives thwarted personally Vladimir Putin. That is not surprising, because the pension preferences have become an integral part of the Russian social contract – curtailing freedoms in exchange for benefits and welfare.

As Russian society react to a further tightening of the screws in the long-term decline in living standards? The Kremlin, realizing the inevitability of resource exhaustion of the old model, proposed to Russians, in fact, a new type of social contract – further cuts in freedoms in exchange for tempting television picture. His first test was held for Putin triumphantly – Crimea became “our”, the opposition fragmented and demoralized, and he earned the recognition and love, even many of the most vocal opponents. It would seem that everything is going just fine.

However, the new model is as tempting for the government as risky. Witch Hunt and the ritual burning of imported delicacies online in the impoverished country may have on the population and short-term action is fascinating. But then the game will require further raising rates. The grand TV show would require the withdrawal of the conflict with the outside world to a new level. Regional and business elite now for such a scenario is not completely ready. The fight for increasingly scarce resources – this is their modus operandi to the new reality.

You can not ignore the many millions of state employees. TV is always able to win only in the sprint, steadily losing in the marathon. Play in the same good king and once again reject the offer sensible economists Putin will be much harder. So, will have to maneuver between requests approximate the oligarchs, must somehow appease the viewer the material and maintaining the image of the growing, if not economic, at least in military terms, the Empire. For the Russian regime this will be a real test on the basics of gymnastics, and the economy are strong challenge after the 1998 default.

Source: Krym.Realii