By Vladimir Soldatkin
VLADIVOSTOK, Russia, Sept 3 (Reuters) – Russian President Vladimir Putin said on Thursday that the size of the budget deficit, which grew by 40% from January to July this year to 2.8% of gross domestic product, poses no “critical” risk for the Russian economy and that it will be managed.
The costs of the 4-1/2-year war in Ukraine have been increasing for Russia, with the economy slowing sharply last year and the government having to raise taxes and increase borrowing to finance the war effort.
“Considering that we have one of the lowest levels of national debt in the world, there is nothing critical here,” Putin said at an economic forum in the Russian far eastern city of Vladivostok.
The official deficit target for this year is 1.6% of GDP.
Ukrainian drone attacks on economic targets in Russia, including oil refineries and warehouses owned by online retail giants Wildberries and Ozon, have created fuel shortages, pushed up inflation, and inflicted losses on small businesses.
The central bank’s board will convene on September 11 to review its key rate, currently at 14%. Businesses have been pushing the central bank to bring the rate below the 12% level, which they say is needed to resume growth.
The growing budget deficit and new inflation risks are major factors in the central bank’s decision. Analysts polled by Reuters this week expected the central bank to keep the rate on hold to evaluate such risks.
Putin said on Thursday it was important not to overcool the economy but added that current monetary policy was not too tight.
Countering claims by businesses that credit has become off-limits, Putin said the government has developed multiple loan programs to support businesses even in the high-rate environment.
(Writing by Gleb BryanskiEditing by Gareth Jones)
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