Prime Minister Viktor Zubkov spent as much budget money in November as no PM had done before him.
Photo: RIA NOVOSTI
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Govt Breaks Stab Fund
Government ruled yesterday to transfer 300 billion rubles to the capital of development institutions already this week. Another 340 billion rubles will be added to their capitalization for account of additional budget revenues generated from the Yukos bankruptcy. Anyway, the inflation effect from this record injection of 640 billion rubles will be noted no sooner than in the second half of 2008, the analysts speculate.
Under the government’s ruling of November 27, 2007 that was promulgated yesterday, the RF Finance Ministry will transfer this week 300 billion rubles ($12 billion) from the Stabilization Fund to the budget account. From it, the money will go to add to the capital of development institutions. What’s more, the development institutions will have to capitalize another 340 billion rubles generated from the Yukos bankruptcy, but the exact date of this capitalization hasn’t been specified so far.
The amount of 640 billion rubles will be an absolute record for the budget system. The money will be distributed as follows: the Development Bank (VEB) will get 180 billion rubles from the Stabilization Fund; Russia’s Nanotechnology Corp. - 30 billion rubles from the Stabilization Fund and 100 billion rubles from the budget; the Fund for Housing and Communal Services Reorganization - 240 billion rubles from the budget; the Investment Fund - 90 billion rubles from the Stabilization Fund.
The money won’t emerge on the market immediately, the analysts say. “I don’t think we will soon see the effect of abrupt reduction in the rates or the effect of inflation,” said Alexander Morozov from HSBC.
The inflation effect triggered by the surge in budget spending will be noticed in the second half of the next year. “In 2008, we will feel in full the inflation effect from this year’s spending. I foresee danger in the fact that the government affords itself to spend money at an accelerated pace,” said Yulia Tseplyaeva from Merrill Lynch.
www.kommersant.com
All the Article in Russian as of Nov. 30, 2007
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