Yesterday, Putin held a meeting on budget policy and ordered that every effort should be made to drag the budget out of the red during this period.
According to Putin, the federal budget may have a deficit of 1% by the end of 2011.
"Now, we have a 1.8% budget surplus after the first five months of the year," he said. "However, we know too well that expenditures inevitably grow in the second half of the year, and we will likely finish the year with a deficit, although it will be smaller than we initially expected. I think that it will consist of between 1.5% and 1%, or possibly even less, rather than 3.6%." The prime minister added that such a small and controllable deficit certainly does not threaten macroeconomic stability.
"It is an important positive indicator, encouraging investors and other participants in economic activities," Putin pointed out.
The prime minister believes that putting an end to the budget deficit is only possible through strict budget discipline. This means weighing and double-checking all expenditures and proceeding from efficiency and thrift in budget spending.
"We will focus allocations on sectors promising multiple returns, above all, a comprehensive socio-economic effect," he explained.
The budget policy will give special attention to infrastructure and innovation development, as well as supporting defence, science, education and healthcare.
"We must also set aside the necessary funds to increase military and police salaries, and solve housing problems in the Defence Ministry and Interior Ministry," Putin instructed the ministers.
The prime minister also tasked the Finance Ministry with estimating the feasibility of reducing insurance premium rates in consumer cooperatives to 20%.
Putin recalled his recent trip to Rostov where he met with agricultural producers.
"Participants at the Rostov meeting called for insurance premium reductions from 30% to 20% for consumer cooperatives, an essential area of agriculture," he said. "I ask the Finance Ministry to estimate the feasibility of such a reduction, and the resultant shortfall in revenues."
The prime minister also pointed out the need to determine possible short-falling revenues due to the decision to reduce social charges.
"It is a critical matter that demands discussion," he said.
Vitaly Petrov
