NOVO-OGARYOVO (Moscow Region), (Sputnik) — Russia's economic situation has changed over the past year and has entered a growth stage, Prime Minister Dmitry Medvedev said at talks with President Vladimir Putin on Monday.
"Our economy has entered a stage of growth. We observed this at the end of last year and are observing this at the beginning of this year," Medvedev said.
He singled out 1.3 percent industrial output growth in late 2016 as an example of the national economy's overall growth.
"In general, the situation in the economy has indeed changed over the past year," Medvedev said in a statement published by the Kremlin website.
Medvedev described as acceptable the current budget deficit and debt values, estimated respectively at 1.4 percent and 14.6 percent of the gross domestic product.
"The deficit and the state debt are at acceptable levels. The state debt has stopped growing and we are keeping the deficit in check. We have mapped out measures to cut the budget deficit within three years as you requested," he told Putin.
The Finance Ministry’s preliminary estimate of Russia’s budget deficit in the first quarter of 2017 is at 1.4 percent of the GDP, or 274.2 billion rubles ($4.9 billion). This year’s budget plan is based on expectations of a 3.2-percent deficit if annual oil prices average $40 a barrel.
The Russian government plans to finance the federal budget deficit with foreign and national loans as well as money put aside in the national reserve fund. Most of the debt, or 10.6 percent, will be owed to domestic lenders.
Medvedev said the year-on-year inflation rate of 5 percent was the lowest in modern Russia, down from double digits recorded several years ago. He said the rate was expected to sink below 4 percent in 2017, increasing the purchasing power of households.
Putin asked for the tax scheme to be revised in an address to the parliament last December. He gave the government until December 2017 to identify key aspects of the new tax policy that comes into force in 2019.
Russia has been hit by a downturn that began in early 2015 after falling oil prices and Western anti-Russia sanctions took bite. The country's GDP fell 3.7 percent in 2015, according to the Russian Federal Statistics Service Rosstat.