"Vedomosti": "ONE-YEAR BUDGET"
Finance Ministry to protect Reserve Fund from deficit
Three-year budget planning may be suspended in Russia and the quotas for financing the budget deficit increased. A government meeting on economic issues, to be chaired by Prime Minister Vladimir Putin, will discuss these proposals today.
"It is necessary to amend the Budget Code," Mr Putin said at a meeting with leaders of the United Russia party held on February 27. "The Budget Code provides for the budget deficit of 1% [of GDP], but the forecast is for a higher figure." At the same time, the deficit figure should not be excessively inflated, Mr Putin warned.
The Budget Code restricts budget deficit financing to 1% of GDP, excluding the resources of the Reserve Fund and the National Welfare Fund. We are not restricting the deficit amount but the amount of state loans to cover it, said Yelena Lebedinskaya of the Economic Expert Group. Loans account for the bulk of deficit financing from non-reserve funds (429.1 billion roubles out of 525.1 billion roubles under the 2009 draft budget).
Starting in 2011, the Budget Code will limit the budget deficit to 4.7 % of GDP, with 3.7% of GDP to be covered from the oil and gas transfer fund and 1% from state loans. A source close to the Finance Ministry says there is a proposal to postpone the introduction of this restriction until 2013 and now to revise the limits on the maximum budget deficit and on deficit financing from non-reserve funds. According to the source, the limit of 1% of GDP is to be removed from the 2009 budget and to be increased in the 2010-2012 budgets; the new limits are under discussion now. The maximum budget deficit for 2009 may be fixed at 8% of GDP; for 2010, at 5%; for 2011, at 3%, and for 2012, at about 1% of GDP.
In 2009, the budget deficit will be at 7.4% of GDP, excluding the deposits of the National Welfare Fund at Vnesheconombank, or VEB; 2.7 trillion roubles will be spent from the Reserve Fund, said Deputy Prime Minister Alexei Kudrin last week. Proceeding from the Budget Code regulations, 55% of the Reserve Fund is to be spent to cover the budget deficit (4.86 trillion roubles, as of February 1), said Vladimir Tikhomirov, chief economist at the Uralsib financial corporation. The Finance Ministry wants to restrict Reserve Fund spending and receive a guarantee that the deficit will not rise again, Ms Lebedinskaya said. According to the Finance Ministry's estimates, the Reserve Fund monies will last for another 2.5 years, but the global crisis "has not yet reached its peak" and may last for a long time, Mr Putin said.
According to Dmitry Peskov, the Prime Minister's press secretary, Mr Putin has convened a government meeting on economic issues today to discuss amendments to the Budget Code. Apart from the budget deficit, the Government will discuss other issues related to the organisation of the budget process.
An official from the economic block said there was a proposal to freeze three-year planning; amendments will be made only to the 2009 budget, while the 2010-2011 budgets will remain fictitious: Even the key budget parameters will not be changed since it is difficult to make any forecasts now.
According to Mr Tikhomirov, the return to one-year planning is a rational measure during the crisis. A three-year plan was introduced for a more balanced funding of long-term programmes, while now all spending, apart from that on social needs, is either cut or postponed. An official from the Finance Ministry resents the idea: "A three-year plan worked wonderfully. It is just the force majeure circumstances that we are having today." A Government official asserts that the one-year budget is a temporary measure which concerns only amendments to the 2009 budget. "In spring, we will start work on a three-year budget again," he says.
"No one even looks at the 2010-2011 budgets now; we cannot be guided by them, because the Finance Ministry has revoked all quotas for long-term contracts, among other things," said an official from the Economic Development Ministry. "Two years with three-year plans have shown that they do not work; one-year planning is the only thing that exists de facto now. The Budget Code is being redrafted depending on the situation."
FTS, Finance Ministry differ on tax revenues
According to the latest estimates made by the Federal Tax Service (FTS), the 2009 tax revenues in Russia will amount to about 2.2 trillion roubles. The Finance Ministry's projected figure is 2.7 trillion roubles, with the two forecasts differing mostly on the VAT amount, says a source familiar with the two agencies' estimates process. Earlier, Deputy Prime Minister Alexei Kudrin said that FTS had produced a conservative estimate, whereas the Finance Ministry had more data.
Olga Ivanitskaya
