The Prime Minister spotlighted the following issues in his address at the meeting.

First, he said it is important to continue to maintain macroeconomic stability and to form a highly responsible and stable budget.
Second, Mr Putin advocated for consistently cutting the budget deficit and inflation while strictly complying with budget discipline. He said inflation in the first six months of 2010 was 4.4%, or 5.8% annually, which is a record-low figure.

However, the budget deficit, which was forecast at 6.8% of GDP this year, can be cut to 5% or even less, thanks to "overall economic recovery and additional revenues," Mr Putin said.

The budget must be balanced by 2015 to ensure money accumulation and formation of reserves.

The government should clearly determine its priorities, approving spending only in the crucial sectors. This above all concerns the social sphere, social obligations, as well as plans to modernise the Armed Forces and to resolve the servicemen's social problems, the Prime Minister said.

Vladimir Putin's opening address:

Good afternoon. Today we should reach some conclusions from our series of meetings to formulate the budget for next year and the 2012 and 2013 planning period.

We have already considered various scenarios for economic development during this period and mapped out the basic financial parameters for our key programmes in the social services, industry, transport infrastructure, agriculture, defence and national security.

I'd like to ask the Finance Ministry and other agencies to finalise the necessary documents for the proposed federal budget and the federal government's extra-budgetary spending as soon as possible, with due account for our current discussion. This will allow us to discuss these documents at a government meeting in the near future.

I'd also like to draw your attention specifically to two or three issues.

First, our partners, the world's leading countries, are gradually curtailing emergency measures to support their economies during the downturn, and are gradually switching to new policies, to policies appropriate for coming out of the recession. We see that one of the main problems our partners are facing is unbalanced budgets and the huge burden of the national debt. These are hampering economic recovery and causing serious social problems and social tensions.

We must avoid these risks and negative factors.

Therefore, I consider it absolutely critical that we maintain our macroeconomic [fiscal] stability. This is currently one of our major competitive advantages, a resource to spur development, attract long-term investment and stimulate business. We need a highly responsible and stable budget. We cannot afford to spend more than we earn.

We must continually reduce the budget deficit and inflation. And in pursuing this policy we cannot let down our guard or depart from strict fiscal discipline.

Inflation amounted to 4.4% in the first six months of this year. This translates into 5.8% for the entire year, which is a historic low.

Next year we should try to keep it at 5% to 6%, and below 4.5% or 5.5% by 2013.

As for the budget deficit, this year we expected it to reach 6.8% of GDP, but the overall economic recovery and additional revenues will allow us to reduce it to about 5%. I think it may be even smaller. Next year the deficit should be less than 4%, and no more than 2.9% in 2013.

By 2015 we need to finally balance the budget and start accumulating funds to build up our reserves, all the more so since this practice has fully justified itself. We have seen for ourselves the usefulness of the reserves and resources accumulated during prosperous periods of economic growth in the world economy, especially international markets and our national economy.

Second, I'd like to point out that this upcoming budget will be tight. In these conditions it is very important for us to focus on our priorities. We must justify and consider the effectiveness of all expenditures and only spend money on truly important issues.

This primarily applies to social services and meeting our social obligations. I'd like to emphasise that our unconditional priorities include everything related to pensions, allowances, public sector wages and salaries, the implementation of housing programmes and the development of healthcare.

We must set aside the necessary funds to cover the deficit in the Pension Fund and aggressively support employment.

We cannot postpone our plans to modernise the Armed Forces or resolve the problems with social services for servicemen, primarily providing them with housing.

Needless to say, we must set aside funds to support innovative and key technological and research programmes, for instance in nuclear energy and space exploration.

And one more point in conclusion. During the next fiscal year we must work out all the issues connected with the transition to the new, programme-based system for formulating the budget. This is a serious goal that requires commitment and concerted efforts from all government agencies.

Let's start working.