Kommersant: "Vladimir Putin calls for stronger fiscal discipline with regard to federal programmes"
Vladimir Putin says he will personally oversee government investment
Prime Minister Vladimir Putin pointed out a long-time problem for government investment. The dates for financing federal targeted programmes often get postponed until the end of the year, he said while chairing a government presidium meeting. An annual analysis by the Ministry of Economic Development shows that spending on these programmes has remained low throughout Vladimir Putin's premiership. Therefore, the prime minister said he would also involve the Government Executive Office in overseeing the distribution of budget funds, along with the Finance and Economic Development ministries, and preparing sanctions against unscrupulous agencies responsible for government investment.
He warned the responsible agencies that the government will "in the future restrict those departments that have failed to carry out the government's plans previously." Putin's dissatisfaction was caused by the low cash basis spending on federal programmes: according to Deputy Economics Minister Oleg Savelyev, who spoke at the meeting, cash spending for the first nine months of 2011 accounted for only 57.7% of the allocated financing.
Putin quoted some figures to emphasise that government investment has significantly increased this year: the budget allocations for the federal targeted programmes totalled 924 billion roubles. At the same time, the agencies responsible for the distribution of government funds actually spent only 533 billion roubles. "This year we have increased budget funding for the implementation of the federal programmes by almost a quarter," he said, suggesting that the amount had not really been necessary.
Incidentally, in 2011 the government for the first time announced plans to increase the financing for federal targeted programmes to a level higher than the pre-crisis level of 2008. When the economic crisis hit, the Russian government cut investment by as much as 40% to 600 billion roubles. However, as follows from the Economics Ministry's analysis of federal spending, crises have no significant effect on the fiscal discipline of agencies. Over the past few years, cash basis spending on federal targeted programmes has remained at 50%-60% as of October 1.
The best result – 59.6% – was registered in 2009, after the crisis. In 2007, which was actually a good year, federal programme financing for the same nine months stood at 52.7%. Even a change in the rules for contracting companies for these programmes did not seem to affect the level of cash basis spending. In early 2008, the government allowed agencies to sign long-term contracts with companies (for the entire period of the programme in fact). However, according to the figures quoted at the presidium meeting, only 15 out of 52 programmes involved contracts that accounted for 78.9% to 90% of the 2011 budget allocations (above the average level). Another 17 programmes had contracts signed for 50% of the planned amount, while the remaining 20 programmes appeared underdeveloped even at the contract-signing level.
Former Finance Minister Alexei Kudrin often raged about the "uneven financial burden" on the federal budget, which always tended to go up towards the end of the year. He often threatened to cut spending due to unfulfilled commitments under the federal programmes. However, the sanctions were never actually imposed. As a result, the government had to hastily redistribute the funds between the various agencies or transfer them into next year's spending plans. This actually triggered a rise in prices at the beginning of the year.
At yesterday's meeting Putin tried on the role of Kudrin, who was fired in October. The Prime Minister said he will "analyse the results for the year and draw the necessary conclusions." While the Economic Development and Finance ministries will be busy making conclusions, the Government Executive Office has been instructed "to analyse the current work and submit proposals." Officially, the Budget Code allows the unused budget funds to be "frozen" and channelled into the Government Reserve Fund at the end of the year. In reality though, the Finance Ministry has "frozen" the contributions to the Reserve Fund and the National Wealth Fund until 2014.
Pyotr Netreba
