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Russia’s upper house unanimously approves three-year budget

November 26, 2014, 12:39 UTC+3 MOSCOW
The federal budget for the next three years is based on Crimea’s integration into Russia, the effects of Western sanctions and large-scale tax changes in the country’s oil industry
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© TASS/Anton Novoderezhkin

MOSCOW, November 26. /TASS/. The Federation Council, the upper house of Russia’s parliament, approved on Wednesday the federal budget for the next three years based on Crimea’s integration into Russia, the effects of Western sanctions and large-scale tax changes in the country’s oil industry.

The three-year budget projects GDP at 77.5 trillion rubles ($1.7 trillion at the current exchange rate) and inflation at 5.5% in 2015, 83.21 trillion rubles ($1.8 trillion) and 4.5% in 2016 and 90.06 trillion rubles ($1.98 trillion) and 4% in 2017.

The government is allowed to spend up to 500 billion rubles ($10.9 billion) from the oil wealth Reserve Fund to make up for a shortfall of budget revenues and state borrowings.

The three-year budget was adopted with a deficit of 0.6% of GDP, which is expected to be financed through state borrowings and privatization proceeds.

Privatizations are expected to be most active in 2015 to yield 158.5 billion rubles ($3.5 billion).

Federal budget revenues are projected to rise from 15.1 trillion rubles ($332 billion or 19.5% of GDP) in 2015 to 15.8 trillion rubles ($347 billion or 19% of GDP) in 2016 and 16.55 trillion rubles ($364 billion or 18.4% of GDP) in 2017.

Expenditures over this period will grow from 15.5 trillion rubles ($341 billion or 20% of GDP) in 2015 to 16.3 trillion rubles ($358 billion or 19.6% of GDP) in 2016 and 17.1 trillion rubles ($376 billion or 19% of GDP) in 2017.

The budget “looks balanced, especially at the federal level,” Federation Council Budget and Financial Market Committee Chairman Sergey Ryabukhin said. “There are risks at the regional level but we’ll watch and monitor the situation,” the senator said.

The three-year budget was approved by the State Duma, the lower house of Russia’s parliament, on Friday.

“All of the state’s existing social commitments become financially-secured obligations after the budget approval not only for 2015 but for the whole of the three-year period,” State Duma Budget Committee Chairman Andrey Makarov said after the budget endorsement.

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