"Komsomolskaya Pravda": "BUDGET DEFICIT TO BE COVERED OUT OF THE RESERVE FUND"
Prime Minister Vladimir Putin uses every meeting with his Ministers to remind them that the crisis has stymied our ambitious plans and that now everything has to be planned anew. Yesterday's meeting devoted to economic matters was no exception.
"The Budget Code was written in a different situation, in 2003-2007, when the challenge was to save the windfall profits. We have succeeded in accumulating a reserve of 8 trillion roubles, which has enabled us to take vigorous anti-crisis measures today."
Indeed, the problems then were of a very different nature. We are now again facing the long-forgotten problem of patching up holes in the budget. The Government's expenditure has not diminished; it has promised to fulfill all the social programmes, yet oil profits have plummeted.
"Today we must introduce amendments to the Budget Code in order to finance the budget deficit out of the Reserve Fund," Mr Putin said.
These words brought a thoughtful expression to the face of Finance Minister Alexei Kudrin. He was more concerned than any other Government member with saving up money for a rainy day, and it seems that day has arrived. The Reserve Fund was protected by the Budget Code, which forbade spending that "safety cushion".
"We should outline the benchmark for the budget deficit in 2010 and the following years," Vladimir Putin said.
The message to the Ministers was clear: we will cover this year's deficit, but make sure there are no holes in the national treasury next year.
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IN THE MEANTIME
Before the meeting on economic issues, Prime Minister Putin met with the President of the Russian Academy of Sciences Yuri Osipov. The country's chief scientist said that the Prime Minister's directive to issue the Big Russian Encyclopedia had been practically fulfilled. Mr Putin was shown 12 volumes. Another 12 volumes will be issued before 2012.
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EXPERT'S COMMENT
Andrei DEMENTYEV of the International Institute of Economics and Finance:
"The Budget Code is a federal law. It sets down the rules for forming the revenue and expenditure items of the federal budget. When the Budget Code was adopted, the main task was to withdraw the revenues from expensive oil and form reserves. Cut-off lines were drawn, the system of collecting mining tax was discussed, and so on. The rules were written with an eye to budget surpluses and not deficits. Now the situation has changed. In order to finance the budget out of the Reserve Fund, the law must be amended. This is essentially what the reserves were created for, but if the current trend continues, no funds will suffice. The Government must cut budget spending."
