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United Russia happy with draft budget, opposition critical

September 30, 2011, 21:23 UTC+3

There is no bubble of social expenditures in the budget 2012. At the same time, allocations for key social needs are not cut

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MOSCOW, September 30 (Itar-Tass) —— United Russia lauds the draft budget of 2012-2014 as ‘a stabilizer’, while the opposition says the budget priorities are wrong.

“On one hand, the main fiscal document of the country continues to clean up the aftermath of the world economic crisis. On the other hand, it bears in mind the risk of the crisis second wave and keeps a lifesaver at hand,” member of the budget working group, first deputy head of the United Russia faction Tatiana Yakovleva told Itar-Tass. “Possible risks of the world market and instability of the external situation force Russia to be cautious in its budgetary forecasts, while it cannot afford a deviation from the path of modernization and innovations.”

“Gas and crude prices are not stable. So we have to hope for the best and prepare for the worst,” she said. “Russia keeps inflating its ‘air bags’ [the Reserve Fund and the Sovereign Wealth Fund] with high crude profits.”

“There is no bubble of social expenditures in the budget 2012. At the same time, allocations for key social needs are not cut,” he said. “Labor pensions will grow by 7% on February 1, 2012, and by another 2.4% on April 1. Social pensions will also grow by 14.1% on April 1. Social allowances will increase by 6%. Scholarships and public sector salaries will be increased. All the military pensions will become 1.5 times larger early next year,” he said.

As a medical professional, Yakovleva noted the importance of allocations for healthcare. Some 195 billion rubles will be spent on the modernization of healthcare institutions and higher medical aid standards in 2012, she said.

The opposition is less euphoric. “This is another budget of slow economic decay and enrichment of oligarchs at the expense of average citizens,” State Duma Vice-Speaker Ivan Melnikov (the Communist Party) said. “Whether the budget has deficit or surplus, whether it gives more money for defense and the social sector or less, that would be a mere re-distribution of petty money against the backdrop of wrong priorities and the failure to solve main problems, i.e. the need to lessen deep social stratification and to restore the nation’s industrial potential,” he said.

“There is an urgent need for large and targeted investments in the social and real sectors, the defense industry, fundamental and applied science and agriculture. This is the only way to keep the economy afloat amid a new crisis, which is coming in particular because of the downfall of crude prices on which Russia is highly dependent,” he said.

As for the dismissal of Vice-Premier, Finance Minister Alexei Kudrin shortly before the submission of the draft budget to the State Duma, Melnikov said, “The disagreements, which caused his dismissal, were a drop in the ocean, as compared with the profound disagreements between the Communist Party and the government.”

The Liberal Democratic faction also said it would vote against the budget, “which continued the oil and gas oriented policy of dismissed Finance Minister Alexei Kudrin and did not fully use the possibilities of revenues. There is no modernization of tax laws, nothing is done to administer taxes, and offshores are not liquidated,” first deputy head of the faction Maxim Rokhmistrov told Itar-Tass. If the second wave of the world financial crisis hits Russia, “that would be a total disaster with the devaluation of the ruble,” he said. “In contrast to 2008, we have no oil ‘thriftbox’ and social commitments remain high and hard for the budget. The middle class will have to bear the full load – pensions of babushkas will be raised at the expense of higher taxes on their children,” he said.

A Just Russia will study the governmental draft, but it has prepared an alternative edition, faction first deputy head Oksana Dmitriyeva said. She was skeptical about the current budgetary planning, because “the fulfillment of earlier governmental budgets exposed their blunders.”

Acting Finance Minister Anton Siluanov will present the draft federal budget of 2012-2014 to the State Duma.

“Acting Finance Minister Anton Siluanov will be the government agent,” Government Representative to the State Duma Andrei Loginov said on Friday.

“The fulfillment of every social commitment is the main priority of this budget,” Budget and Tax Committee Chairman Yuri Vasilyev said. “The second main area is economic modernization and investment projects, which are vital for the fulfillment of social commitments. The third area is national security and modernization of the Armed Forces.”

In contrast to the previous year, electricity and public utility charges will grow on July 1 instead of January 1. “Electricity charges will increase by 15%, while gas charges will grow by 6%,” Vasilyev said.

“At the same time, railroad tariffs will grow on January 1 due to bigger investments and modernization of the rolling stock,” he said.

“More than 550 billion rubles are assigned for healthcare. Most of the money will be spent on salaries of doctors and nurses, acquisition of new medical equipment, prevention and therapy of cancer and cardio-vascular diseases and general modernization of healthcare institutions,” he said.

“About 170 billion rubles will be assigned for the real sector, primarily the car industry, aircraft and machine building and transport security,” he said.

“The Budget and Tax Committee will do colossal work in October and November to prepare the budgetary bills for house meetings,” Vasilyev said. In addition to the draft budget, the government has presented ten bills, which must be approved in the same period, he said.

“The Committee proposes to hold the first reading of the budgetary bills on October 21, the second reading on November 18 and the third reading on November 22. We are also due to adopt a number of tax laws, which are necessary for collecting budgetary revenues. The autumnal session will be very busy for our Committee,” he said.

The budget 2012 has the following macroeconomic parameters: 11.78 trillion rubles in revenues and 12.65 trillion rubles in spending. Budgetary revenues will amount to 12.71 trillion rubles in 2013 and 14.1 trillion rubles in 2014; while budgetary expenditures will stand at 13.71 trillion rubles in 2013 and 14.57 trillion rubles in 2014.

The draft budget 2012 is based on the Urals oil price of $100 per barrel, GDP growth of 3.7%, and GDP of 58.68 trillion rubles.

The draft budget 2013 is based on the Urals oil price of $97 per barrel, GDP growth of 4% and GDP of 64.8 trillion rubles.

The draft budget 2014 is based on the Urals oil price of $101 per barrel, GDP growth of 4.6% and GDP of 72.49 trillion rubles.

The federal government and the Central Bank aim to cut the inflation to 5-6% in 2012, 4.5-5.5% in 2013, and 4-5% in 2014.

The budget deficit will amount to 1.5% GDP in 2012, 1.6% in 2013 and 0.7% in 2014.

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