Stopping kickbacks will help save up to ten percent of the budget. There is a need for public oversight of huge procurement deals, Russian Prime Minister Vladimir Putin writes in article the newspaper “Vedomosti” published on Monday. He notes there is a need for close oversight of the cost and quality of construction and of prices at procurement deals, and, actually, for stopping kickbacks when state funds are used at both federal and regional levels.
“We must cope with this, as this will make for saving at least five percent and, possibly, even ten percent of the budget, that is from one to two percent of GDP a year,” Putin holds.
The premier urges the earliest possible introduction of public oversight of state procurement. He notes that the draft bill on the federal contract system envisages a mandatory preliminary public discussion of the format of a state purchase and the starting price. “I believe this procedure should be applied to all huge purchases whose value exceeds, say, one billion rubles without waiting for the bill being passed,” the premier writes.
“Let us use to the benefit of society private interest of firms, potential suppliers,” Putin urges. “Let them get into the habit of discussing, jointly with journalists and public organizations concerned, whether a technological project being ordered is abreast of the times, which firms can best fulfill such an order, and what minimal costs can be,” he writes.
He also suggests that the budget sphere “should get rid of inertia by which we continue to finance institutions rather than the social services they should provide.” “There is a need to switch wherever possible to the normative per capita financing, when funds should be allocated to citizens who turn for services. Competition should be developed,” the premier writes. He estimated that “this will result in another 10-15 percent of internal savings that can go for raising the salaries of teachers, doctors, and university professors and for providing medicines for the sick without drawing on the funds in the social sectors for these purposes.”
The head of government notes that these steps will make for meeting the growing obligations of the state. “We have already assumed significant long-term budget obligations, first of all, in the social area, and we are going to observe them unswervingly. Considerable expenditures are due for the modernization of our Armed Forces. The development of public health, education, road construction and repair will need much spending, too,” Putin noted.
In this connection the premier mentioned as a priority task the restoration of the balance between revenues and expenditures. The premier notes that “the connection between them lessened during the crisis, when sizable funds were allocated to absorb external shocks.” “We must be very cautious about budget borrowings, bearing in mind a few lessons from the recent world and Russian economic history,” Putin warns.
“First, a sizable debt always entails giving up part of a country’s independence. From this viewpoint Russia is today in an advantageous position as compared with other counties, as it has, for instance, the lowest state debt among the countries of the Group of Twenty. And we must preserve our advantage as an earnest of macroeconomic security,” Putin writes. “Second, when people lend money to their state, this is always a draw on financial resources that could be used for private investments. And if we want to increase them, we must not run a high budget deficit,” the head of government warns.
Putin holds the creation of macroeconomic stability must lead to forming “long money”.