11/12/2017 |

From the reform of supervision is expected plus 2% of GDP

Alex Vedev

Legislative regulation of non-tax payments, reform of control and supervision activities and modernization of the institution of bankruptcy will add 2 percentage points to the Russian GDP to the planned 2% growth, Izvestia writes, citing the director of the Center for Structural Research of the Russian Academy of Science and Technology, former Deputy Minister of Economic Development Alexei Vedev.

Thus, the reform of control and supervision activities is designed to reduce the administrative pressure on business by eliminating obsolete business requirements and introducing a risk-based approach that reduces the frequency of inspections. However, Alexei Vedev says that everything will depend on how high the quality of the reforms is.

According to Bohdan Zvarich, senior analyst at Freedom Finance, Bogdan Zvarych, administrative pressure not only has a negative impact on the already existing business, but also keeps people from creating a new one. As for the forecasts, according to the results of 2018, GDP growth may be about 2% -2.2%, and here the main factor is the extension of the OPEC + agreement by the end of 2018. Plus, in the Investment Firm “Freedom Finance” they are waiting for the growth of investments, which will be helped by the decrease in the cost of loans due to the lowering of rates by the Russian Central Bank. A corresponding reduction in the deposit rate will create additional demand for Russian companies’ bonds while reducing the cost of servicing their debt. There are also expectations of a positive impact on the consumption growth economy.

It’s reasonable to connect the business climate and economic growth, says Valery Plotnikov, General Director of NEO Center. What, for example, in practice means the adoption of a code of non-tax payments? It says that “non-tax payments will become economically justified, some of them will be canceled,” but most importantly, if it is adopted, then after July 1, 2019 it will be legal not to pay for payments that did not fall into the registers of this code. For business, this will most likely mean that “small” types of local payments, which are still enough in the regions, will “fall off”.

Regarding the bankruptcy procedure, too, many questions and inefficiencies accumulated, which really become the cornerstone of economic development, Valery Plotnikova believes. The mechanism of bankruptcy is not perceived as an instrument that heals the industry, but as a way to transfer the financial obligations of the owner to its counterparties. Such mechanisms hinder economic growth and could give an additional 100-200 basis points to GDP growth, if they were corrected. Provided, of course, that favorable external factors will remain, such as a high oil price.

As for the administrative pressure on the business, then, of course, if the frequency of inspections is reduced and tied to the risk management indicators of the enterprise, this will give a good impetus to small and medium-sized businesses, analysts agree.

However, it is worth paying attention to the words of the former deputy minister Alexei Vedev about “the quality of the reform.” It is far from completely clear what exactly the departments are putting in the reform of control and supervision. The best intentions of this kind have repeatedly turned around the opposite side. Each agency tries to pursue its interests, and the realization of such interests is capable of both increasing corruption risks and leading to objective contradictions between the interests of business and economic development and the performance of control functions. The reform is presented as very deep, and it is also capable of both reassuring and alarming. Minus 2 percent of GDP instead of plus, of course, as a result of its implementation is unlikely to get, but, in general, the result is still difficult to predict.

Author: Anna Koroleva


Article in Russian: Expert.ru

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