Boris Titov Kudrin said on “exposing the threat to the economy of the myths”

Boris Titov

Photo: Love Mishina for RBC

The business Ombudsman has published an extensive commentary to the statement of the former Minister of Finance, who yesterday made with the exposure of the “five dangerous for the economy of myths”. Boris Titov said he was ready to debate with Alexei Kudrin, in any form — in person or in absentia

Business Ombudsman Boris Titov has commented on the statement of former Finance Minister and now head of the Center for strategic research (CSR) Alexei Kudrin, who yesterday listed five dangerous for the Russian economy myths. His answer he published in Forbes magazine.

For a start Boris Titov has explained why he decided that Kudrin said on debunking the “current economic fallacies” are criticizing his economic program.

“He (Kudrin) modestly did not name the perpetrators of the authors, but like the old joke about the lion who warned the animals and said that for stealing chickens, he will be hit in the face, “this is a brazen red face…” — everyone, including us, it immediately became clear who he has in mind. Red face our: proceedings of the Stolypin club, but that’s just “Leo” is absolutely wrong,” wrote Titov, stressing that he, along with colleagues he is ready to prove his innocence in any format.

According to Titov, the proposals that are put forward Kudrin, based on the “propassivny position.” “But our position is different,” said the Ombudsman, prefacing their comments each of Kudrino points.

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Commenting on the first exposure, Titov wrote that he does not consider the abandonment of inflation targeting. “We must continue to fight it, including measures of monetary policy”, — said business Ombudsman. According to him, “the fetish of low inflation” in the absence of economic growth and its prospects — a road to a dead end.

Speaking of the second exposure of the “myth” which is that economic growth is constrained by lack of money supply, therefore, it is possible to push through the expansion of the money supply, the Ombudsman stated that he agreed with Kudrin: “Thank you for your support, Alexey Leonidovich, all quite true: we feel the same way. Financial and overall economic system is weak. And what should be done to strengthen the system? Need to give a boost to — need active policy to support growth, which would include not only economic (tax, tariff, institutional solutions), but also financial measures.”

Titov also noted that monetization really will be the result of these measures, however, changing financial system, it is necessary to pour into it “more blood, without which the new mechanism will not start”. “That’s what we’re talking about, not that old inefficient institutions to give money, that they somehow extended stagnation,” — said Titov.

The third paragraph of the discussion with the former Minister of Finance consists of two parts, said Titov, is in a dispute about the growth of the economy, which is impossible due to the lack of spare production capacity. With this statement Titov Kudrin does not agree. According to the Ombudsman which covers the main commercial risks with their own money, can better than others to weigh the balance of risks and profitability in unprofitable projects is not specified.

The second part is the question about the possibility to launch such projects by reducing the interest rate. “Only through interest rates impossible: need measures. But this condition is necessary: the high rate directly affects the cost of credit” — says Titov.

The fourth “myth” is that “growth can contribute to some analog of “quantitative easing” — the provision of additional liquidity on preferential terms”. Kommentera it, Titov said that Kudrin offers nothing, and merely States that the situation is hopeless. “But there are already positive examples we have seen real growth in precisely those areas where the government led an active expansionary policy: in agriculture, automotive, IT, defense industry,” — says the Ombudsman, explaining that his program offers “not the helicopter money is to scatter”, and “to invest in specific projects of” import substitution, expansion of infrastructure, introduction of new technologies.

Concluding his speech, business ombudsmen commented on the policy of the Central Bank in respect of currency regulation, which previously said Kudrin. “Do not interfere with the ruble free falling, if it falls,” said the former Minister. This Titov meets him that he is not welcomed fixed rate. “We have been confused with Glazyev or with whom. Moreover, we believe the Central Bank error that he first went and stayed too long and was later released from the policy of the currency corridor. Created a huge “speculation” for banks in the foreign exchange market and pave the way to greater rate volatility during the crisis in the oil market,” said Titov, stressing that he is in favour of the course set by the marketplace, but the state “in some very special moments of crisis” could introduce elements of soft money regulation.

Kudrin on the eve of the newspaper “Kommersant” published an article “exposing” five dangerous for the economy of the myths. None of the authors of these “myths” Kudrin called.

CSR Kudrin is developing a strategy of reform until 2024, the document will be submitted in may of this year. Prior to this economic program CSR criticized the Russian presidential adviser Sergei Glazyev.

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