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Finance Ministry Presents Oil-Free Budget
A draft 2007 federal budget was approved at the meeting of the government yesterday. At the same time, Finance Minister Alexey Kudrin showed the cabinet members budget accounts without income from the export of oil and natural gas. He thus showed that the 2007-2009 budget could not be balanced without that income. The Finance Ministry is demanding that petrodollar expenditures in the budget be limited to 2.8 percent of the GDP. That would entail reconsidering the entirety of the budget but it is the only way to free Russia from the current market conditions for oil.
The budget itself was not the main topic of yesterday's meeting. All of those present were familiar with it already. Kudrin once again informed his colleagues that “Russia today has the highest indicators of dependence of the budget on oil and gas.” What was new was Kudrin's suggestion that a 2.8-percent limit on petrodollar spending, which he says is the limit of independence from oil and gas income, be set by legislation. The minister did not say yesterday how he would purge the budget of oil and gas money. His method is not yet being made public. The numbers are public, however. In a 2007 budget without petrodollars, the deficit would be 5.4 percent of the GDP, or 1.7 trillion rubles. Within the suggested limit, 874.16 billion rubles from oil and gas could be spent. In reality, 3.183 trillion rubles in oil and gas money will be spent.
The other cabinet members commented little on Kudrin's theoretical budget, being far more interested in the remaining opportunities to increase spending in the real budget. Minister of Culture Alexander Sokolov, for example, asked for an additional 13 billion rubles to prevent further robberies from museums. Agriculture Minister Alexander Gordeev, heeding his colleagues' fears of increased inflations, asked for 10-15 billion rubles to use as aid to offset increased diesel prices. Even Minister of Economic Development and Trade German Gref made an appeal to raise the state investment fund for 2007 from 101.7 billion rubles to 140 billion rubles.
Kudrin has also suggested funneling income from natural gas exports into the stabilization fund, which is now accumulating only oil revenue. That idea did not receive support.
Expenditures of the Russian Federal Budget (Bln, roubles)
| |
2006 |
2007 |
Change |
| Total |
4324.1 |
5463.5 |
1139.4 |
| Transfers from the federal budget |
1443.7 |
1821.2 |
377.5 |
| To regional and other budgets |
542.1 |
756.5 |
214.4 |
| To offs-budget funds |
901.6 |
1064.7 |
163.1 |
| General government |
444.3 |
664.2 |
219.9 |
| National economy |
346.8 |
519.5 |
172.7 |
| National defense |
659.3 |
821.2 |
161.9 |
| National security and law enforcement |
539.5 |
664.1 |
124.6 |
| Education |
208.1 |
277.7 |
69.6 |
| Health care and sports |
156.2 |
205.4 |
49.2 |
| Culture, cinema and mass media |
51.2 |
64.1 |
12.9 |
| Environment |
6.4 |
7.8 |
1.4 |
| Housing and utilities |
53.5 |
49.4 |
-4.1 |
| Social services |
217.3 |
212 |
-5.3 |
| Interest-bearing expenditures |
197.8 |
156.8 |
-40.9 |
| Source: Russian Finance Ministry |
www.kommersant.com
All the Article in Russian as of Aug. 18, 2006
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