The growth of budget spending and temporary placement of free Finance Ministry and state corporation funds guarantee calm on the interbank credit market at the end of the month. In the photo: Finance Minister Alexey Kudrin.
Photo: Grigoriy Sobchenko
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Budget Spending Grew in 1st Quarter
Federal budget expenditures in the first quarter of the year reached 1.38 trillion rubles, the Finance Ministry reported yesterday. That is significantly higher than a year ago and twice as high as three years ago. Thanks to those expenditures, predicted liquidity problems at the end of this month will not materialize, when quarterly VAT payments are due, but inflation is climbing in step with them. In January, 390.7 billion rubles were spent, 467.9 billion rubles in February and 524.3 billion in March. March spending exceeded the 2007 monthly average. The figures are not adjusted for economic growth and inflation.
The budget plan in being fulfilled faster than last year. In the first quarter, 19 percent of the annual budget allocations were fulfilled, compared to 17.4 percent a year ago, amounting to 16.7 percent of the GDP, compared to 14 percent a year ago. Nonetheless, spending is lagging 440 billion rubles (6 percent) behind evenly-spread theoretical spending. Budget income was 1.93 trillion rubles in the first quarter, which is 24 percent of the annual plan (8.06 trillion rubles), or 23.4 percent of the GDP.
Troika Dialog economists Anton Struchenevsky and Evgeny Gavrilenkov, in their daily review, called the budget spending an “attack” on the economy, and opined that the current rate of inflation can be considered low in light of it. They predicted an annual inflation rate of 12.5-14 percent for the year. Tatyana Orlova of ING Russia suggested that inflation may hit 15 percent for the year. Nonetheless, Russian President Vladimir Putin stated yesterday at a meeting with economic officials that the budgeted state investments for 2008-2010 will be carried out regardless. He thus expressed support for the position of Minister of Economic development and Trade Elvira Nabiullina's economic policies, as opposed to the more conservative outlook of Finance Minister Alexey Kudrin.
www.kommersant.com
All the Article in Russian as of Apr. 11, 2008
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