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Russian Deputy Prime Minister Alexander Novak said that a predictable and sustainable budget policy creates room for reducing inflation risks and gradually normalizing interest rates, according to an interview with the Vedomosti newspaper reported by TASS.

"The more predictable and sustainable budget policy is, the more room there will be for reducing inflation risks and gradually normalizing rates," Novak was quoted as saying.

Coverage Comparison

The remarks, carried by TASS on May 12, come as the Russian government faces the task of balancing the budget amid declining revenues and growing spending needs. Novak attributed the revenue shortfall primarily to the strong ruble exchange rate and a period of low oil prices, while expenditures related to defense and security continue to rise.

Key Claims

  • Budget balancing: The government must prioritize spending on the most effective areas, such as technological leadership projects, Novak said. He stressed that all expenditures related to technological leadership will have a strictly disinflationary effect in the long term.
  • Economic cyclicality: Novak described economic dynamics as cyclical, with a period of high growth always followed by a correction, calling it "a normal stage for the economy."
  • Inflation forecast: Novak said inflation will approach 5.2% in 2026 and will be close to the target level of 4% starting in 2027.
  • GDP growth: The government expects GDP growth of 0.4% this year, followed by a recovery from 1.4% in 2027 to 2.4% in 2029.
  • Energy crisis: Novak said Russia does not view the energy crisis caused by the conflict in the Middle East as an additional source of solving its budgetary and macroeconomic problems.
  • Income and unemployment: Real wages in Russia grew by 4.4% last year, while poverty fell to a historical minimum of 6.7% by the end of 2025, according to Novak. He also said unemployment in 2026 will remain low, within the range of 2.3-2.4%.
  • Investment and savings: Novak emphasized the need to develop Russia's financial and long-term savings markets, including stimulating capital market development and encouraging companies to launch IPOs.

Perspectives

Novak's comments reflect the Russian government's official position on economic policy, emphasizing fiscal discipline and technological leadership as key drivers of growth. While the statements are reported by Russia's state news agency TASS, they provide insight into the Kremlin's economic strategy amid external pressures. Novak also acknowledged the cyclical nature of economic growth and the need for risk management to ensure a smoother transition to balanced growth.