Russian Finance Minister Alexei Kudrin attends a session of the Federation Council.
Photo: Dmitry Dukhanin
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Budget Expenses Reserve
// Finance Ministry lays 5 percent for unforeseen social obligations
Russian Ministry of Finance suggested creating a new budget fund in 2008 which will supplement the already existing stabilization fund and investment fund. The new fund will serve for financing the state’s unplanned social obligations. According to the new version of the Budget Code, which will be discussed by the Cabinet today, 5 percent of the so-called “public obligations” of the state should be put for unplanned raise of base part of pensions, maternity capital, and unemployment allowances. The fund might reach some 200 billion rubles ($7.5 billion) in 2008.
The Cabinet will consider amendments to the Budget Code today. Finance Minister Alexei Kudrin suggests creating a reserve fund to guarantee that the state’s unplanned social obligations to Russian citizens are carried out.
The Ministry of Finance cannot say exactly what part of the expenses of Russia’s budget public obligations make. According to international practice, social obligations usually are between 50 and 70 percent of all budget expenses. So, when the amendments to the Budget Code come into force in 2008, the reserve fund will have some 200 billion rubles ($7.5 billion) if it is 70 percent, and 120 billion rubles ($4.5 billion) if it is 50 percent.
Russian State Duma will discuss the 2008 budget in April. The “5-percent fund” might appear already in that budget. However, it is unlikely to cause debates like those about stabilization and investment funds. The Ministry of Finance underlined that the fund’s money will not be spent on other purposes or saved up.
Petr Netreba
All the Article in Russian as of Jan. 25, 2007
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