Counter deficit measures by Gavrilenkov

Yevgeny Gavrilenkov, the SU HSE Professor, speaks on Russian governmental policy options for the Moscow News.

Yevgeny Gavrilenkov, chief economist at Troika Dialog and a fierce opponent of deficit spending, said that some officials were up against powerful lobbying interests. "There are different points of view within the government apparatus. Those on the receiving end of the budget - they have a lot of lobbying power," he said. "And they will do what they can to get their funds. This is typical for non-market institutions."

Gavrilenkov advocated cutting the federal budget - currently standing at about 9 trillion roubles ($255 billion) - by 1 trillion roubles ($27 billion). But Gavrilenkov and other economists claimed the differences between lobbying groups were mostly practical, and they did not suggest a particularly deep political or ideological divide.

"A deficit means further dependence on oil prices," said Gavrilenkov. "We can sustain a deficit for about a year. But if it becomes chronic, it can be deadly for a country like Russia."

As for providing an economic stimulus, he is sceptical. "It would seem that if you increase the budget by 40 per cent, then you get a 40 per cent increase in new jobs. But it just doesn't work that way. If you build 40 per cent more roads and bridges, then you've got to be certain that the economy can sustain that." Deficit or not, the government remains adamant about maintaining a social safety net.

According to Gavrilenkov, the government could avoid a budget deficit by finding the funds for a stimulus package from other sources. Gavrilenkov said he was not sure who would be calling the shots about the budget strategy. "There is the premier, and there is the president. I'm not certain. But the premier has always said that you shouldn't spend more than you earn. I share this position. In the end, everything depends on common sense."

Yevgeny Gavrilenkov for the Moscow News.