In 2009, the federal budget spent 1.2 trillion rubles ($38 billion) to support the economy, but at least a third of that — 450 billion rubles — could have been saved, according to an audit by the Higher School of Economics. The research was performed "in the interests of the government," the school notes on its web site. The results are only preliminary, said Valery Mironov, deputy director of the school's Development Center, which performed the work. The 7.9 percent yearly drop in the economy was only one-fourth caused by falling demand and three-fourths by of a reduction of surplus inventories. "Supporting demand could not be efficient because industry reduced output totally independently," the report says. But the structure of anti-crisis spending shows that this factor was not taken into consideration. Only 92 billion rubles, or 8 percent of the budget's anti-crisis package, was spent on measures the center attributes to stimulating demand, and almost all of that money was spent on supporting Russian Railways and government purchases of automotive equipment.
The lion's share of spending was for dubious necessities — 360 billion rubles propping up Vneshekonombank, VTB, Rosselkhozbank, Rosagroleasing and the State Transportation Leasing Company. The banking system also received massive support from the Central Bank, with total direct state support of the financial sector amounting to 7.6 percent of gross domestic product (about 3 trillion rubles). And, even with that, the Central Bank wasn't able to stimulate lending to the economy: Loans to individuals fell by 11 percent, and companies were buried by overdue loans. The necessity of using the federal budget to support the banks is questionable, Mironov said. But the 248 billion rubles directly injected into the real economy via subsidies for interest rates on loans, as well as support for individuals and the labor market, was logical, he said.
The most effective means of support in a crisis is to assist "low-liquidity entities," that is, those who won't use the money to save or speculate, but rather boost the economy by spending, Mironov said, citing recommendations by the Organization for Economic Cooperation and Development. But among G20 member states (excluding the Group of Seven), there are few that would readily leap to fulfill such recommendations, he added. State purchases of automotive equipment were one of the most effective measures, Deputy Economic Development Minister Andrei Klepach said. Without them, the recession among producers of commercial vehicles would have been much more severe.
State assistance to banks helped the institutions survive but did not completely support lending. But this cannot be grounds to conclude that the measure was ineffective, Klepach said. It was hindered in many ways by companies' inability to repay loans. No one, except China, has been able to solve this problem, he added. "In order to study the effectiveness of expenditures, it must be understood what the situation would have been like without them," said Sberbank's chief economist, Ksenia Yudayeva. There was not such a sharp drop in lending, she added. Investments in capital helped restructure companies' bad loans.
Author: Olga Kuvshinova
