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Prime Minister Vladimir Putin conducted a Government meeting

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Events / Video

Vladimir Putin's opening remarks:

Good afternoon,

Today we are to examine the guidelines of budgetary policy and the parameters of the federal budget, the budgets of the Pension Fund, the Social Insurance and Mandatory Medical Insurance Funds for 2009-2011.

But first I would like to stress that the Government's key task today is to curb inflation. So, all the decisions on possible increases in budgetary expenditure must be taken very judiciously. Considering their impact on macroeconomic stability, all allocations must be well grounded and effective. There should be no ineffective expenditure.

In developing the budget we have, for the first time, applied in practice the "sliding three-year period" method. In other words, we correct budgetary items for 2009 and 2010 and at the same time make plans for 2011. Let me stress that all earlier budget commitments are to be complied with unconditionally. This is the underlying logic of the three-year budget.

Funds should be allocated to raise social pensions to the minimum living standard in 2009.

The development of education is a key priority. The federal budget will spend almost 1.4 trillion roubles on it over the next three years.

In public health, the main decisions will be connected with stepping up control of socially significant diseases such as HIV, tuberculosis, diabetes and some other diseases. And of course they will be connected with an increase in hi-tech medical assistance.

In the next three years much will need to be done to develop the infrastructure and modernise the Russian economy. Under federal targeted programmes and the targeted investment programme, more than 4.6 trillion roubles will be disbursed for these purposes over three years.

Beginning in 2009 the structure of defence spending will undergo substantial changes. Formerly additional allocations were used to maintain the army and to index the current expenditure for inflation. To put it in simple terms, the money was used just to feed the armed forces. Today a growing share of allocations is used to develop the armed forces.

Let me remind you what parameters we are seeking. In 2006, 70% of the military budget was used to maintain the armed forces and only 30% to develop them. In 2008 we will spend 40% for maintenance and 60% for the development of the armed forces. And in accordance with the earlier decisions of the Security Council, by 2015 we should achieve a development/maintenance ratio of 70%:30%.

I have already spoken about the importance of combating such national scourges as drunkenness and smoking, especially among the young. I think that beginning from 2009 we should start financing measures to propagate a healthy way of life and encourage people to give up harmful habits.

And finally, we should give thought to preparing our team for the Winter Olympics in Sochi. 14 billion roubles will be allocated for that purpose over three years. I am sure the returns on this expense will be good. At least I hope so.

Preparation of the draft budget is entering its final stage. It should be introduced at Parliament not later than August 26.

In the remaining time I urge you to have another close look at the items to be financed, assess their effectiveness and timeliness and discuss the budget programmes with the State Duma deputies and members of the Federation Council as part of the so-called "zero reading".

By the way, I had a meeting with the parliamentary United Russia Party yesterday. I am sure you have seen it. We agreed on a process for future work, including working on the budget. We have agreed to retain the practice of "zero reading" in the future.

I suggest that we open the discussion. The issues should have been prepared by now. We have discussed them many times in various formats. I give the floor to Mr Alexei Kudrin, the Finance Minister and Deputy Prime Minister.

Minister of Health and Social Development Tatyana Golikova and Deputy Finance Minister Tatyana Nesterenko held a briefing after the Government meeting.

Tatyana Golikova said that in 2009 more than 135 billion roubles will be disbursed from the federal budget to finance the transition to a new system of remuneration of public sector employees and a salary raise of 30%.

"These are substantial figures, Tatyana Golikova stressed. They account for more than 30% of the current wage fund and are sufficient to finance the transition to a new system."

The Minister recalled that the transition to a new remuneration system would begin from December 1, 2008. To this end the Government has instructed the heads of all the federal budget-financed institutions to develop and introduce criteria of assessing the performance of their employees before December 1, 2008. Such a system should determine if the performance of an employee is in accordance with his level of remuneration.

"The new remuneration system is not just an increase of budget allocations to the wage funds of the federal budget-financed institutions, the Minister stressed. She said that "it also implies the responsibility of the heads of these institutions and the establishment of the performance criteria jointly with the ministries under whose jurisdictions these institutions operate".

Deputy Finance Minister Tatyana Nesterenko told the briefing that the Russian Government had approved the guidelines of budgetary policy and the main parameters of the budget for 2009 and for 2010-2011.

The federal budget surplus will amount to 707 billion roubles (1.5% of GDP) in 2009, 610 billion roubles (1.1% of GDP) in 2010 and 702 billion roubles (1.1% of GDP) in 2011.

The budget revenue in 2009 will amount to 19.6% of GDP (9.518 trillion roubles), 18.7% of GDP (10.402 trillion roubles) in 2010, and 18.0% of GDP (11.408 trillion roubles) in 2011.

Budget spending in 2009 will amount to 18.1% of GDP (8.811 trillion roubles), 17.6% of GDP (9.792 trillion roubles) in 2010 and 16.9% of GDP (10.706 trillion roubles) in 2011.

Tatyana Nesterenko said that before July 4 the Finance Ministry would send the budget parameters to every agency whereupon work would begin to hammer out the differences between ministries and agencies. She said that work on the budget with Parliament would begin tomorrow.

In accordance with the Budgetary Code, the document will be submitted to the Government before August 11 and to the State Duma before August 26.