The government is now preparing 13 national projects to implement the goals announced by President Vladimir Putin after the elections, Kommersant Daily writes today quoting working versions of the projects, which are yet to be announced officially. As previously said, the projects will require total of financing of RUB 25tn over the next six years, of which RUB17 trillion is already included in the budget framework and RUB 8tn will need to be secured additionally. According to Kommersant, the biggest projects are related to road construction (RUB8.4 trillion), demographic problems (RUB3.6 trillion), infrastructure (RUB1.8 trillion), digitalization of the economy (RUB1.3 trillion). Overall, the projects are rather similar to the previous one during 2015-2018, with an increased focus on healthcare.
The financing for the additional RUB8 trillion remains unclear, but the amount is not that large in our view (a little over 1% of GDP per year). Most probably the government will rely on a combination of sources including the retirement age hike, the National Wealth Fund (which can be invested in new projects after its liquid part exceeds 7% of GDP), spending cuts in the defense industry, slight softening of the budget rule. Outright increases to tax rates are unlikely, in our view, but the government will seek to collect additional revenue from closing loopholes and increasing the tax base.