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Petrodollars Will Be Spent Differently
Russia has converted to a three-year federal budget with a government resolution approving the rules for the computation of budget income from fossil fuels. Finance Minister Alexey Kudrin was able to have that income separated from other forms of income in the budget. The effectiveness of the new form of budgeting will be apparent by June of next year.
The new budget goes into effect January 1, and the stabilization fund ceases to exist on February 1. That fund has been collected by the Finance Ministry since 2004 and contained 3.7 trillion rubles on December 15. While oil exports were the sole source of stabilization fund savings, the oil and gas transfer (to the budget), the Reserve Fund and the National Prosperity Fund, which will succeed it, will also receive the revenue of customs duties on natural gas and petroleum products and the mineral tax on hydrocarbons.
The Reserve Fund's size has been set at 3.5 trillion rubles for 2008, 3.97 trillion rubles for 2009 and 4.5 trillion rubles for 2010. Those funds can be used only for the early repayment of state foreign debt. The oil and gas transfer will have priority, however. It will receive 2.1 trillion rubles in 2008 and 2009 and 2 trillion rubles in 2010 in monthly installments paid to the budget. After those funds are disbursed, the remaining, smaller amount of money will go to the National Prosperity Fund. It will receive 200-300 million rubles from the stabilization fund. That money can be used to cofinance voluntary pension funds or to cover budget deficits in the Pension Fund.
The new rules do not specify how the funds will be kept. At first, the same conservative policy that was in force for the stabilization fund will be followed, and the funds will be kept in dollars, euros and pounds.
www.kommersant.com
All the Article in Russian as of Dec. 20, 2007
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