DEBT FINANCING. Russian Finance Minister to Take Kudrin Path

Sept. 28 (Bloomberg) -- Anton Siluanov, named Russia’s acting finance minister yesterday after Alexei Kudrin was forced out, said his main goal is to win parliamentary approval for the government’s 2012-2014 federal budget.
Kudrin, who had led the ministry since 2000, was dismissed by President Dmitry Medvedev on Sept. 26 after publicly criticizing 2.1 trillion rubles ($66 billion) in additional defense spending through 2014. The outlays have already been approved and the ministry will continue studying military expenditure, Siluanov said in a phone interview.
“The main goal for me personally and for the Finance Ministry is to continue the work that was already started,” Siluanov said late yesterday by telephone in Moscow.
Concern over growth in the global economy and Europe’s sovereign-debt crisis has roiled markets in Russia, which saw its economy contract 7.8 percent in 2009, its worst recession on record. Even as growth returned in 2010, with economic output rising 4 percent, the government’s macroeconomic policies would “benefit from more stable, predictable” frameworks in monetary and the government’s fiscal policy, the International Monetary Fund said in a report published yesterday.
Joined in 1985
Siluanov, 48, joined the ministry in 1985, the year Mikhail Gorbachev became general secretary of the Soviet Communist Party, before leaving to serve a two-year stint in the army, according to his official biography.
He returned to the ministry in 1989 as an economist and later led the macroeconomics and inter-budgetary relations and departments. He was a deputy finance minister from July 2003 to May 2004 and then again from December 2005 until his appointment yesterday.
Siluanov “is likely to be a very temporary figure” and was selected over stronger figures such as Sergei Shatalov, a deputy finance minister in charge of tax policy, until a new government is formed after the March presidential vote, Julia Tsepliaeva, head of research at BNP Paribas in Moscow, said in an e-mailed report.
‘Good, Solid’
Prime Minister Vladimir Putin, who announced the appointment at a government meeting yesterday after it was approved by Medvedev, said Siluanov was a “good, solid specialist.” First Deputy Prime Minister Igor Shuvalov will take over the responsibilities Kudrin had as the deputy prime minister in charge of the economy, Putin said.
Medvedev held a meeting with Siluanov today in the presidential residence in Gorki, outside Moscow, the Kremlin said in a statement on its website. They discussed work on the budget and how the global economic situation is affecting Russia, according to the statement.
“The current head of the ministry will have a more technical rather than political decision-making role, increasing the risk of additional growth in expenditures and the deterioration of the budget breakeven to oil prices,” Alfa Bank economists Natalia Orlova and Dmitry Dolgin said today in an e- mailed research note.
Unlike possible political appointees, “Siluanov is a career financial expert, who grew up in the Finance Ministry,” Kudrin told the Vedomosti newspaper in comments published today. Kudrin, named finance minister of the year by Euromoney magazine in 2010, said his former deputy was prepared to head the ministry.
’Additional Risk’
Medvedev agreed last week to swap places with Putin after presidential elections in March. Kudrin, 50, told reporters in Washington after the announcement that he couldn’t work in a future Cabinet if it were led by Medvedev because his military spending plan through 2014 would create too much “additional risk” to the economy.
Kudrin had been in office since 2000, crafting the nation’s recovery from its 1998 default by reining in public spending and creating national funds that cushioned the impact of the global credit squeeze.
“Alexei Kudrin was a person to whose level I’d like to rise,” Siluanov said. “I understand that replacing him is impossible, but honestly, I’d like to be like him. It will be hard for us without him.”
Russia’s leaders didn’t hold preliminary talks with him about the appointment and no time frame was set for how long he will serve as acting finance minister, Siluanov said.
“Everything will depend on the results I deliver,” he said. “A decision will be made by the country’s top leadership and I hope I justify their faith.”
A draft of the budget has already been approved by the government and must now be submitted to the State Duma, the lower house of parliament.

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