Extra revenues did not make Finance Minister Kudkin give up a habit of saving up.
Photo: Yury Martyanov
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Finance Ministry Saves on Budget Expenditures
The Russian Finance Ministry is successful in pursuing a budget policy even stricter than was expected, according to budget expenditure data for 2006. Although the federal budget reaped 22.3 percent more in revenues than planned last year, financial authorities managed to cut expenditures by 1.8 percent, saving at least 100 billion rubles. In the pre-election 2007, the Finance Ministry will hardly be able to carry out the same stringent budget policy, analysts say.
Federal budget revenues totaled 6.277 trillion rubles in 2006, which is 22.3 percent higher that it was planned, according to data released by the Finance Ministry. State expenditures came to 4.366 trillion rubles last year, 1.8 percent lower than it was expected.
Maxim Tishin, a portfolio manager at the Invest investment bank, says that cutting on expenditures is a traditional administrative measure of dealing with inflation. Other analysts disagree, though. Yaroslav Lisovik from Deutsche UFG says that the 170 billion rubles that was left unspent in 2006 is the money of the state investment fund which will be spent in 2007. The same is true for other funds as they are going to be earmarked later this year.
A lot of experts voiced concerns late last year about a possible hike in consumer prices in response to exceptionally high budget expenses at the end of the year. The government, however, managed to keep inflation in Russia under the planned 10 percent. Yet, over the 15 day of the new year inflation already went up 1.3 percent, Central Bank chairman Sergey Ignatyev reported.
In long-term forecasts, experts predict budget expenses to rise this year due to growing oil prices and the upcoming election campaign in Russia.
www.kommersant.com
All the Article in Russian as of Jan. 19, 2007
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