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Contrary to expectations, Alexey Kudrin wasnt seriously attacked by lobbyists in the White House.
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June 23, 2006
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Govt Faces Deficit Draft
Russias cabinet sealed yesterday the guidelines of 2007 budget. The draft sets forth 170-billion ruble deficit, which Finance Minister Alexey Kudrin intends to set off by placing governments bonds and by adding the remainder of 2006 budget.
In line with expectations, Alexey Kudrin presented yesterday the deficit draft of 2007 budget (less Stabilization Fund). The budget in Russia has suffered no gap since 1999.

Todays deficit is rather figurative, and Finance Ministry specified sources to fund budget spending. The gap of 170 billion rubles could be set off by 150 billion rubles remaining from this year (which would have gone to the Stabilization Fund otherwise) and by the governments bonds worth 50 billion rubles.

To attain the moderate size of deficit, Kudrin had to turn down quite a few influential lobbyists, including 1st Deputy PM Dmitry Medvedev, who requested 195 billion rubles only for demography, Economic Development Minister German Gref, Industry and Energy Minister Viktor Khristenko, Russian Regional Development Minister Vladimir Yakovlev and even PM Mikhail Fradkov.

German Gref, for instance, wont see more than 100 billion rubles in 2007, of which he intended to funnel 87 billion rubles to federal target programs. The program of Chechnyas revival will be closed next year. The Chechens benefit from 6.1 billion rubles under that program in 2006 and have requested 30 billion rubles for 2007 and 52 billion rubles for 2008. Instead, they will confine to lump-sum subsidies of 3.7 billion rubles.

Another party affected is Prime Minister Mikhail Fradkov, as the draft spells out no nanotechnology or VAT reduction proposals advocated by the PM.

Regardless, the yesterdays discussion of the budget was not very heated and no brawl happened in the end. It was decided instead to give the problem careful consideration till August 1, i.e. Kudrin will be looking for new methods to balance the budget up to this day. The methods are not few in number, but the most acceptable one is obviously the better collection of taxes. So, Russias business is likely to remember 2007 budget exactly for this peculiarity.

2007 Budget Draft
Revenues, incl. Stabilization Fund 6.628 trln rbl
Revenues less Stabilization Fund 5.112 trln rbl
Spending 5.282 trln rbl
National Defense 119.1 bln rbl
Security, Law Enforcement 84.7 bln rbl
Federal Target Programs, Investment Fund 629.1 bln rbl
Primary Deficit 170.4 bln rbl
Surplus 1.346 trln rbl
Stabilization Fund as of late 2007 4.065 trln rbl

All the Article in Russian as of June 23, 2006

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