The resignation of Russian long-standing Finance Minister Alexei Kudrin, widely seen as a guardian of Russia’s fiscal stability, may trigger a wave of budget spending and boost the budget deficit, a former Russian economics minister said on Wednesday.
“The most serious immediate threat is that excessive spending might be planned, the budget deficit may increase and large risks will be created for our future,” said Yevgeny Yasin, Research Director of Russia’s School of Economics, who also served as Russia’s economics minister in 1994-1997.
Kudrin was ousted on Monday after invoking President Dmitry Medvedev’s wrath by saying he would decline a job in a future Russian government that Medvedev is likely to head. Kudrin cited disagreements with the president on economic policies, in particular on rising defense expenditure, as the reason.
The statement came after Medvedev and Prime Minister Vladimir Putin unveiled their plans on Sunday to exchange offices after next year’s presidential elections. Medvedev is expected to replace Putin as the leader of the pro-Kremlin United Russia party and become the country’s prime minister.
Yasin said Kudrin had stepped down because “he was unable to stop a flow of meaningless or excessive expenditure.”
Foreign investors regarded Kudrin as the person most likely to carry out far-reaching economic reforms in the next government, with Western economists almost unanimously seeing his departure as negative for the Russian economy.
Kudrin, 50, served as finance minister since 2000. During this time the Russian government paid off most of its substantial foreign debt and created oil wealth funds to soften the blow of the global slump.