26.03.09

Russia's federal budget revenues for 2009 will be 40% below target. The explanatory note for new budget amendments says that lower oil prices will cost the budget 2.7 trillion rubles, and the economic crisis in Russia will reduce revenues by 3.84 trillion rubles. Company profits and payrolls will decrease, with a substantial impact on the government's tax receipts.

In order to make the budget deficit fit into acceptable parameters with an anti-crisis package of 2.46 trillion rubles, the Finance Ministry stated a month ago that it planned to cut spending by 1.25 trillion rubles. In reality, existing spending commitments will be cut by 943.3 billion rubles, while new spending commitments amount to 1.61 trillion rubles.

The budget's spending list is divided into 11 sections, and funding has been increased for three of them. Spending on the national economy is going up by 51.5%, to 1.6 trillion rubles: this includes aid measures for the finance market, the labor market and sectors of industry (325 billion rubles), the banking system (300 billion rubles), RosAtom subsidies (50 billion rubles), and compensation to Russian Railways (RZD) for lower revenues due to raising charges less rapidly (50 billion rubles). Social policy spending is being increased by 40%, with an extra 130 rubles for indexing social payments.

Transfers for supporting regional budgets and extra-budget funds will increase by 15.7%. The Payroll Fund will increase by 17% less than predicted earlier, remaining just over last year's level.

Spending cuts will apply to national defense, housing and communal services, culture, health care, and education.

Spending optimization in the area of education will mostly entail construction of new premises (8.2 billion rubles cut) and current expenses. Education spending will be cut by a total of 29.2 billion rubles. Spending on health care and sports will be cut by 27.2 billion rubles (7.5%). The Health and Social Development Ministry plans to cut back construction projects already under way, delay construction and postpone starting new projects. These cuts amount to 16.2 billion rubles.

State spending on television and radio broadcasting is being increased by 35%. This includes making "socially significant programs... that correspond to long-term development priorities for the state and society." Political analyst Alexei Makarkin points out that television is the best way of influencing citizens' minds, and the ability to do so is immensely important for the authorities during a crisis.

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Source: “Vedomosti”