Russian Fiscal Framework Past, Present and Future. Do we Need a Change?

Abstract

This study examines the Russian public finance system. It provides a description of the main fiscal reforms introduced by the Government from the moment of the USSR dissolution, which enabled a reduction in the economy’s dependency on nonrenewable resources. The study presents the fiscal stabilization analysis. It conducts a fiscal impulse factor analysis as well as the estimation of the degree of the fiscal policy cyclicality in the period 2000-2014. The estimates show fiscal policy was procyclical in 2006-2008 and is expected to be so in 2012 while stabilizing during the rest of the period. The study also discusses fiscal sustainability issues for the period up to 2050 under two socio-economic scenarios. The size of the necessary fiscal consolidation under the current fiscal strategy is calculated and an alternative strategy is investigated.

JEL classification: E32 ; E62 ; H6