VLADIMIR PUTIN PERMITTED WITHDRAWAL OF 3 TRILLION RUBLES FROM THE CONTINGENCY FUND: RUSSIA IS BACK IN 1999
Independent economists and the Finance Ministry argue over what to make of the budget deficit this February.
The federal budget was implemented with a deficit this February. According to Finance Ministry’s rough calculations, it amounted to 243.5 billion rubles i.e. costs exceeded revenues by 54%. “Sure, months such as this happen every budget year. November 2008 was one. This February was different, however. I’d say Russia is entering a period of chronic budget deficit,” Yevgeny Gavrilenkov of Troika Dialog said. Finance Ministry officials challenged this assumption. They said a single month set no trends.
The last budget deficit in Russia was logged in 1999. All annual budgets as of 2000 were implemented with a budget surplus.
January surplus amounted to 359.8 billion rubles or 13.9% of the GDP (against 10.4% in January 2008).
Budget revenues in January and February exceeded costs by 116.3 billion rubles. All the same, they amounted to only 1.219 trillion rubles or 9.1% less than in January and February 2008.
Costs in January and February amounted to 1.103 trillion rubles and topped those logged in the first two months of 2008 by 19.4%. “We owe it to a better balanced distribution of funds our transition to a three-year budget allowed,” a Finance Ministry official said.
The Finance Ministry said in the middle of February that 2.69 trillion rubles should be withdrawn from the Contingency Fund to cover the budget deficit. Premier Vladimir Putin permitted the use of up to 3 trillion rubles yesterday (62% of everything accumulated in the Contingency Fund). Putin called this figure (3 trillion rubles) optimal because he said uncontrolled use of the reserves would send inflation soaring sky-high.
Use of the Contingency Fund will be restricted and costs sequestered in 2010 to bring budget deficit to under 5% of the GDP (8% this year), a Presidential Administration official said.