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Vladimir Putin delivered the Budget Address

June 29, 2012, 13:03 UTC+3
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Russian President Vladimir Putin laid down the main provisions of the Budget Address for next three years, which, according to experts, were “crisis-oriented”. This fact was substantiated with the presidential instructions to envisage the reserve in the budget for 2013, return to the budget rule and accelerate the creation of the Russian Financial Agency.

Despite the fact that Vladimir Putin did not dwell straightforwardly on any anti-crisis measures in his Budget Address, the experts polled by the RBC daily are convinced that the authorities are actively preparing for a crisis. “I ask to envisage a sufficient reserve in the budget for next year to fulfil anti-crisis measures, if it certainly needed be,” the president said at the beginning of his speech on the Budget Address. The experts claimed that the comeback to the golden budget rule, which was suggested by the Finance Ministry, is an obvious hint to the preparations for the crisis. The ministry suggests introducing restrictions on expenditures, drafting a three-year budget on the basis of the average oil price for the last five years.

The government and the presidential administration have made public the results of preparations to a possible escalation of the world financial crisis, the Kommersant daily reported. President Vladimir Putin delivered the Budget Address to the government with the demand “to combat the factors of instability.” Several hours later Prime Minister Dmitry Medvedev approved the budget rule, which, according to estimates of the Finance Ministry, envisages the reduction of “conventionally distributed expenditures” by 343.3 billion roubles already in 2013 and reserved up 200 billion roubles in the Reserve Fund for anti-crisis measures.

Vladimir Putin has made public the annual Budget Address on Thursday. The president called for the abandonment of assessing the budget execution only through fixed expenditures for some purposes and the comeback to the so-called budget rule, which rules out an opportunity to use the revenues, which were gained in the times of high prices on oil and gas, for current expenditures. The government has been debating the budget rule at least since January 2012, and Putin summed up the debates on Thursday, confirming the intentions to plan the budget expenditures on the basis of the average oil price for the last five years. Meanwhile, the maximum budget expenditures should not exceed the revenues with the basic price of more than one percent of GDP.

The keynote of the Budget Address is that “the instruments of the budgetary policy should be targeted at the counteraction to the factors of instability – a high inflation and a budget deficit,” which the government fulfilled within several hours. The government approved the amendments to the Budget Code, which introduced the budget rule. The model of the Finance Ministry became basic, as the ministry suggested calculating the oil average annual price in dollars for the last ten years.

The Russian Financial Agency is planned to be launched soon in order to manage the state debt, free budgetary resources, national funds and pension savings, as well as a common Internet portal of the Russian budgetary system, which will accumulate the information on how the state resources are spent, the Novye Izvestia daily noted. Meanwhile, the president noted that the government will not raise the taxes for all sectors of economy, except for the oil sector, until 2018. Putin also pledged to keep education and medicine free of charge for ordinary people.

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