23 september 2010

Prime Minister Vladimir Putin chairs a government meeting

Vladimir Putin

At a government meeting

“We hope that economic growth will help to balance the country’s budget. Extra budget revenues should come from qualitative economic development and not from oil fees or the demand for natural resources.”

Vladimir Putin's opening remarks:

Good afternoon, colleagues.

Today we are going to review the results of the government's work on the draft federal budget and the draft budgets of state extra-budgetary funds for 2011-- 2013. Within the budget process, we had to resolve several major issues. First, to guarantee the fulfillment of our social obligations to the people. Second, to continue modernising the real economy and key infrastructural elements. Third, to preserve macroeconomic stability. I think we managed to find a reasonable balance between these three key goals.
In 2011, budget revenues are expected to reach 8.8 trillion roubles and expenses 10.6 trillion roubles.

So, the deficit of 1.8 trillion is 3.6% of the gross domestic product, which, I would like to stress, is much lower than this year's deficit, which is expected to equal 5.3%. Originally we thought it would be higher.
The deficit will continue to decrease. By 2013, it will be less than 3% of GDP, and then we will reach a zero deficit, maybe earlier. Judging by the changes that occurred last year, it may be earlier.

We hope that economic growth will help to balance the country's budget. Extra budget revenues should come from qualitative economic development and not from oil fees or the demand for natural resources. So we have made a conservative forecast for oil prices. The current cost for oil is $75 per barrel, according to the draft budget for 2011.

Of course, the decisions we made in the tax sector should increase budget revenues as well. I mean the increase of mineral extraction taxes, indexing excise taxes, and changing payment rates in the Pension Fund, Social Fund and the Mandatory Medical Insurance Fund.
We should approve the corresponding draft laws today, with regard of the measures to ease the burden of increased taxes. I mean reducing the transport tax and introducing preferential rates for social contributions for mass media and small innovative high-technology enterprises.

Now a few words about budget spending priorities.

Programmes on modernising social healthcare that cost a total of 460 billion roubles will become a new feature of the 2011-2012 budget. We already discussed this issue, so I won't spend much time on it, just a brief schedule. There are plans to use 216 billion roubles in 2011 and 244 billion roubles in 2012. And there are plans to spend 300 billion roubles out of the whole sum on repairs, modernisation of medical facilities, and providing necessary equipment, 136 billion roubles on financing medical treatment and 24 billion roubles on information technology in the healthcare system as a whole.

Now we demand detailed and well-calculated plans of how the regions' will use this money, so that next year people can see medical service improving. Though we understand quite well that there is some kind of inertia and we don't expect drastic changes to occur immediately, I am sure that if we work hard and use this money efficiently, the country will feel the results of our efforts to improve the healthcare system.

In addition, 135 billion roubles will be spent on implementing the national project Health, which will provide extra payments to local physicians and nurses, assistance to victims of car accidents, care for patients with cardiovascular and oncological diseases.

The national project Health will feature additional provisions to improve mother and child health services.

We will spend 4.7 trillion roubles on pension programmes. We planned to increase pensions by 8% beginning from February 1, 2011, to an average level of 8,800 roubles per month. Child allowances will be indexed on January 1. In particular, birth grants will equal 11,700 roubles and maternity capital will grow to 365,700 roubles next year.

This year, a child birth allowance is 10,989 roubles and maternity capital is 343,379 roubles.
Wage funds in federal agencies will be increased, as would be military pay and student grants.

A total of 207 billion roubles will be spent on traditional housing programmes, which is on providing housing for war veterans, military officers, residents of the North and other categories of people.

Note that 88 billion roubles will be spent in 2011 to provide permanent housing for military personnel and 60 billion roubles on service accommodation, including 53.9 billion roubles on permanent housing and 20.1 billion roubles on service accommodation for the Ministry of Defence.

An extra 15 billion roubles will be invested in the Housing Reform Fund through which home repairs are financed and people relocated from dilapidated buildings. This money will help the fund to continue working on a full scale.

Of course, the budget will preserve its role as an important tool for modernising and developing the economy and infrastructure. A total of 1.6 trillion roubles will be spent on these goals in 2011.

I would like to make note of the decision to establish road funds. We have often talked about this in recent years with regional officials and others. When using this mechanism, we should spend 387 billion roubles on repairs and construction, which is 20% more than in 2010.

A total of 178 billion roubles will be spent on improving science and technology, 89 billion roubles on the Information Society project, 115 billion roubles on the space programme and 115 billion roubles on the nuclear energy sector. Also, supporting the aircraft industry (48 billion roubles) and shipbuilding (14 billion roubles) remains a priority.

Some 7 billion roubles will be provided for an energy conservation campaign, meaning legal requirements to increase energy efficiency will be supported by money from the federal budget.

Now about the state programme to improve agriculture: 153 billion roubles will be spent on this programme. We should do everything possible to help our agricultural producers to weather the difficulties caused by this year's crop failure and drought and preserve the positive tendencies that have been developping in the agricultural sector in recent years. I think that no one doubts that rural areas in Russia have potential.


As you know, the government will present the draft budget to the State Duma by October 1, 2010. We are grateful to State Duma parliamentary parties and Federation Council members for the proposals and remarks they made during work on the budget. We hope that joint work will continue.

I would like the Ministry of Finance and other federal executive agencies to immediately start preparing bylaws and documentation on competition so that we will not have any delays from the beginning of the year and so we can start working on all these programmes from January 1.

Let's begin the discussion.

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