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2007 Budget a Bomb So Far
Income to the federal budget for the first two months of the year is significantly behind schedule, the Finance Ministry has announced. If things continue in like manner, the budget shortfall will be much larger than the 170 billion rubles predicted by Finance Minister Alexey Kudrin.
According to Finance Ministry data, in January and February of this year 888.68 billion rubles were received by the budget. That is 56.6 percent of the plan for the first quarter. In the same period last year, 74 percent of the plan had been received. Using that indicator, 160 billion rubles remain outstanding this year. Budget expenditures are proceeding on schedule, however. Recipients of budget funds received 991.7 billion rubles (74.7 percent of plan) in that period and 547.6 billion rubles (41.3 percent of plan) was spent in cash. Numerous investment banks have commented on the situation in their weekly reviews, calling it a sign of the inefficiency of the budgeting process.
Kudrin and other government officials warned repeatedly that this year's budget would be more complex than previous ones. Although the project price for a barrel of Urals oil was reduced from $61 to $55 per barrel, its average price in January and February was about $51.60. Central Bank chairman Sergey Ignatyev noted at a government meeting earlier this month that the Federal Tax Service's estimate of collections for the year is 400 billion rubles less than what is calculated in the budget.
If tax collection (particularly VAT collection) does not pick up, tax cut plans will be scuttled. The president's budget message published recently seems to indicate that the government expects that turn of events. Another possibility is that pressure on the shadow economy will be stepped up. Ignatyev estimated the volume of fictitious financial operations per year at 1.5-2 trillion rubles. Many of those operations are unsedto avoid VAT payment.
www.kommersant.com
All the Article in Russian as of Mar. 15, 2007
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