PRESS RELEASE*

The following issues are scheduled for discussion at the August 23, 2011 Government meeting 

1. Progress in the implementation of the Federal Budget in the first half of 2011

Overall parameters of the Federal Budget implementation

The GDP in the first half of 2011 amounted to 24,085.0 billion roubles, an increase of 3.9% compared with the same period last year. Consumer prices of goods and services increased by an average 5.0% in the first half of 2011.

Federal budget revenues amounted to 5,306.4 billion roubles in the first half of 2011. Federal Budget spending for the period under review in terms of cash amounted to 4,602.9 billion roubles. There was a surplus in the Federal Budget of 703.5 billion roubles.

Federal budget revenues

Taxes accounted for 53.5%, and non-tax revenues for 46.5%, of the total Federal Budget revenue of 5,306.4 billion roubles. The largest part of Federal Budget revenue came from Value Added Tax (29.2%), customs duties (36.4%), the extraction tax (17.9%) and other revenues (16.5%).

1.Tax revenues of the Federal Budget in the first half of 2011 amounted to 2,837.8 billion roubles -- 38.0 billion roubles, or 1.4% above the target for the first half of 2011.

Most of the Federal Budget tax revenues came from the Value Added Tax (54.6% of total tax revenues), the extraction tax (33.4%) and the corporate profits tax (5.7%).

2. Non-tax revenues  of the Federal Budget in the first half of 2011 amounted to 2,442.4 billion roubles, which is 155.4 billion roubles, or 6.8% more than the total predicted in the forecast for the first half of 2011. Within the structure of non-tax revenues, revenues from customs duties accounted for 79.1%, revenues from the transfer of part of the Bank of Russia profits accounted for 6.3% and revenues from treasury management of the Reserve Fund and the Fund of National Well-Being, for 2.2% of the total amount of non-tax revenues.

Federal Budget spending

1. In all, cash spending of the Federal Budget in the report period amounted to 4,602.9 billion roubles, or 41.8% of the updated budget for 2011. In the first half of 2011, cash implementation of Federal Budget spending under updated itemisation was at approximately the same level as in previous years, but was less than last year (3,893.8 billion roubles, or 39.2% in the first half of 2009 compared with 4,386.2 billion roubles, or 42.5% of updated budget itemisation in the first half of 2010).

2. Cash spending on national priority projects during the period under review amounted to 192.7 billion roubles (43.8% of updated budget itemisation). The following is the breakdown by project:

(billion roubles, in % of the updated budget list )

The sovereign debt as of July 1, 2011 stood at 4,619.6 billion roubles, up 461.4 billion roubles since January 1, 2011.

The national external debt of the Russian Federation decreased by 183.3 billion roubles to 1,034.4 billion roubles between January 1, 2011 and July 1, 2011.

As of July 1, 2011 the aggregate size of the Reserve Fund was 746.8 billion roubles and the total size of the National Well-Being Fund was 2,600.4 billion roubles. The Reserve Fund diminished by 95.5 billion roubles and the National Well-Being Fund, by 28.4 billion roubles during the first half of 2011.

2. Concerning certain aspects of state regulation of the financial market in the Russian Federation 

The draft resolution of the Government of the Russian Federation  Concerning Certain Aspects of State Regulation of the Financial Market in the Russian Federation, has been submitted by the Ministry of Finance.

The draft resolution was prepared with the goal of implementing the Decree of the President of the Russian Federation No.270 of March 4, 2011, On Measures to Improve State Regulation of the Financial Market in the Russian Federation.  It is aimed at distributing the functions of normative legal regulation of the financial market between the Ministry of Finance and the Federal Service for Financial Markets (FSFR of Russia).

The draft resolution would approve the new edition of the Statute on the Federal Service for Financial Markets and would introduce amendments to the Statute on the Ministry of Finance, and other acts of the Russian Government, including the annulment of some of them.

The main principle of the redistribution of authority is to place under the jurisdiction of the Ministry of Finance the functions of working out the national policy and normative legal regulation of financial markets, including outlining guidelines for the development of the securities market. The FSFR of Russia will implement legal regulation aimed at improving supervision and control in the above area of activity.

The draft resolution envisages the redistribution of authority in the Russian Federation concerning the adoption of supporting legislation between federal executive bodies in the financial market.

In particular, the FSFR will issue orders concerning the exercise of oversight powers, including those involved in insurance activities, the activities of self-regulating organisations, credit consumer cooperatives, monitoring of the financial market, the fight against insider fraud, manipulation, as well as approval of the reporting format by market participants, procedures for obtaining licenses, compliance of micro-finance organisations which raise money from individuals and legal entities as loans, with capital and liquidity requirements. In accordance with the agreement with the Ministry of Finance, acts will be adopted in order to establish standards for the professional activities of participants in the securities market, and standards of information disclosure. The Ministry of Finance, in agreement with the FSFR, will adopt legal acts on government regulation of the activities of non-state pension funds in the sphere of non-state pension provision, mandatory pension insurance and professional pension insurance (with the exception of regulatory legal acts on the legal relations between a non-state pension fund and participants in the non-state pension fund, insured persons and their legal successors as well as relations in which the Pension Fund of the Russian Federation is a subject), license requirements, market access, the level of participants’ own assets, requirements for the qualification of executives, prudential oversight measures, assets requirements, control and supervision of the activities of the credit history office, requirements of the size and procedure of calculating the assets of mutual investment funds, non-state pension funds, exchange intermediaries , mortgage agents, issues connected with micro-financing, etc.

3. Submitting to the President of the Russian Federation for subsequent introduction for ratification the Agreement between the Russian Federation and the Republic of South Ossetia on Cooperation and Mutual Assistance in Customs Affairs

The material has been submitted by the Ministry of Foreign Affairs.

The draft resolution would approve and submit to the President of the Russian Federation for subsequent introduction for ratification at the State Duma of the Federal Assembly of the Russian Federation, the Agreement between the Russian Federation and the Republic of South Ossetia on Cooperation and Mutual Assistance in Customs Affairs, signed in Moscow on December 9, 2010.

The Agreement is aimed at strengthening cooperation in customs affairs and combating customs offences, facilitating passenger and cargo traffic between the Russian Federation and the Republic of South Ossetia, ensuring that customs duties are fully collected and that the bans and restrictions on goods being moved across the border between the Parties are established in accordance with the laws of the parties.

The Agreement, in accordance with Article 15 of the Federal Law On International Treaties of the Russian Federation, is subject to ratification because it contains rules other than those laid out by the laws of the Russian Federation. In particular, to ensure the performance of the functions of the customs services of the Parties and to perform customs operations with respect to goods, Article 5 of the draft Agreement envisages the creation, by mutual consent, of specialised customs bodies on the territories of the Parties: a Russian one in the Republic of South Ossetia and a South Ossetian one in the Russian Federation.

4. Signing the protocol for introducing amendments to The Agreement on the Procedure of Payment and Collection of Export Customs Duties (Other Duties, Taxes and Levies), when Exporting from the Territory of the Republic of Belarus beyond the limits of the Customs Area of the Customs Union, of Crude Oil and Certain Categories of Petroleum Goods, dated December 9, 2010

The draft document has been submitted by the Federal Customs Service (FTS of Russia).

The draft Protocol has been developed to ensure the implementation of the Agreement on the Procedure of Payment and Collection of Export Customs Duties (Other Equivalent Duties, Taxes and Levies), when Exporting from the Territory of the Republic of Belarus beyond the Limits of the Customs Area of the Customs Union, of Crude Oil and Certain Categories of Petroleum Goods, dated December 9, 2010.

The present language of sub-paragraph 2, Paragraph 5, Article 7 of the Agreement does not permit the Republic of Belarus to correctly calculate the sum subject to be transferred to the budget of the Russian Federation. Excess sums paid (collected) as export customs duties and fines within one working day can be returned to the payer only out of the money entered in the account of the authorised body of the Republic of Belarus in the report day. Thus, the sum subject to be transferred to the budget of the Russian Federation on the day following the report working day must be calculated taking into account the deduction of the sums of export customs duties and fines returned to the payers of these sums during the current day, and not the report day. With regard to this, relevant amendments are introduced in Article 7 of the Agreement.

In addition to the procedure of payment (charging), refund of export customs duties (other equivalent duties, taxes and levies) with regard to crude oil and some categories of petroleum products exported from the customs area of the Customs Union from the territory of the Republic of Belarus, the Agreement lays out the procedure and composition of the information to be exchanged for the purpose of control by the customs bodies of the Russian Federation of the correct calculation, payment (charging) and transfer of the sums of export customs duties. 

5. Signing the Treaty on Interaction between Authorised Currency Control Bodies of the Member States of the Agreement on Coordinated Principles of Currency Policy, dated December 9, 2010

The document has been submitted by the Ministry of Finance

The draft treaty has been prepared in accordance with the Agreement on Coordinated Principles of Currency Policy of December 9, 2010, that sets forth the main principles of the currency policy pursued by the Parties, and seeks to promote cooperation in the currency and financial sphere.

Article 7 of the Agreement envisages the conclusion, in some cases, of corresponding international treaties, for example, for the implementation of the provisions of Article 5 of the Agreement on the Interaction of Authorised Bodies of the Signatory States that engage in currency control.

The preparation of the draft treaty was prompted by the need to form a legal framework for effective cooperation between the authorised currency control agencies of the Republic of Belarus, the Republic of Kazakhstan and the Russian Federation in exposing violations of the law by residents of the member states of the Agreement during the course of currency operations, as well as exchange of information between these agencies.

The draft treaty determines the procedure of interaction between the authorised currency control bodies of the member states of the Agreement, in order to ensure compliance with currency legislation during the course of currency transactions, and the security of the financial systems of the member states of the Agreement.

The draft treaty envisages interaction between the authorised currency control bodies on the following aspects of information exchange: cooperation in preventing, detecting and stopping violations of currency legislation by the residents of the member states of the Agreement during the course of currency transactions, joint analytical studies in the field of currency control and organising the exchange of statistical data.

The draft treaty envisages the exchange of information at the request of authorised currency control bodies and the procedure of rendering mutual practical assistance by authorised currency control bodies, and determines the principles of interaction between authorised currency control bodies.

To insure the safety of information that is exchanged,  the draft treaty requires the authorised currency control bodies and their officials to respect banking, tax and other secrets protected by the law to which they have become privy during the course of their duties.

The draft treaty also establishes that the exchange of documents and information between the authorised currency control bodies within the framework of this treaty does not constitute a violation of banking, tax and other secrets protected by the law. The information transferred by authorised bodies may contain data considered banking secrets under Article 26 of the Federal Law On Banks and Banking. At the same time, the authorised bodies of the Republic of Belarus and the Republic of Kazakhstan are not, under that article, on the list of bodies authorised to receive such information.

In this regard, and in accordance with Sub-paragraph “a”, Paragraph 1, Article 15 of the Federal Law On International Treaties of the Russian Federation, the treaty is subject to ratification after being signed.

6. Draft Federal Law On Introducing Amendments to Article 5 of the Federal Law On Introducing Amendments to the Budget Code of the Russian Federation Concerning the Regulation of Budget Process and Harmonising with the Budget Legislation of the Russian Federation of Certain Legislative Acts of the Russian Federation and the Federal Law On Introducing Amendments to the Budget Code of the Russian Federation and Other Legislative Acts of the Russian Federation

This draft federal law has been submitted by the Ministry of Finance. In connection with the Federal Budget deficit expected in 2011-2013, Federal Law No. 245-FZ of September 30, 2010, On Introducing Amendments to the Budget Code of the Russian Federation, and other legislative acts of the Russian Federation, the provisions of the Budget Code of the Russian Federation on separate planning of oil and gas and non-oil and gas revenues and oil-and-gas transfer have been suspended until January 1, 2014.

The draft law would extend the provisions of the budget legislation of the Russian Federation on the formation and implementation of the federal budget, without separating its revenues into oil and gas and non-oil and gas revenues, and on suspending restrictions on the Federal Budget deficit, until January 1, 2015.

7. Introducing amendments to certain acts of the Government of the Russian Federation

The draft resolution of the Government of the Russian Federation on introducing amendments to certain acts of the Government of the Russian Federation has been submitted by the Ministry of Education and Science.

The draft resolution has been developed pursuant to Federal Law No.2-FZ of February 2, 2011, On Introducing Amendments to the Law of the Russian Federation On Education and Articles 11 and 24 of the Law On Higher and Further Professional Education, pertaining to the improvement of the Unified State Exam (EGE).

The draft resolution introduces amendments to the Statute on the Ministry of Education and Science of the Russian Federation, approved by Resolution No.337 of the Russian Government of May 15, 2010, and to the Statute on the Federal Service for Supervision of Education and Science (Rosobrnadzor), approved by Resolution No.300 of the Government of the Russian Federation, of June 17, 2004.

The draft resolution:

● authorises the Ministry of Education and Science to approve statutes on the system of public oversight over state (final) attestation of students in the basic general and secondary (complete) general education; 

● more clearly formulates the powers of Rosobrnadzor to organise the holding of the Unified State Exam jointly with the founders and promoters of Russian education institutions located outside the territory of the Russian Federation;

● authorises Rosobrnadzor to adopt the procedure of the preparation, use and safekeeping of control measuring materials.

Under the draft resolution, these powers are exercised within the limits on the maximum number of Ministry of Education and Science and Rosobrnadzor employees set by the Government and within the budget allocations to the above Ministry and Service under the Federal Budget for management in the sphere of the established functions.

8. Introducing amendments to the Statute on the Ministry of Economic Development of the Russian Federation 

The document has been submitted by the Ministry of Economic Development.

Federal law No.41-FZ of March 20, 2011, On Introducing Amendments to the Urban Development Code of the Russian Federation and Certain Legislative Acts of the Russian Federation concerning territorial planning, introduces amendments to Federal Law No.209-FZ of December 26, 1995, On Geodesy and Cartography, whereby the federal executive body in the field of geodesy and cartography is authorised to approve certain regulatory acts on the maintenance of the federal, territorial and departmental cartography and geodesy funds. In accordance with the Statute on the Ministry of Economic Development of the Russian Federation, approved under the Resolution No.437 of June 5, 2008 of the Russian Government, the Ministry of Economic Development is the federal executive body that performs the functions of working out state policy and legal regulation in the sphere of geodesy and cartography.

Pursuant to Federal Law No.41-FZ of March 20, 2011, the draft resolution of the Russian Government introduces amendments to the Statute on the Ministry of Economic Development of the Russian Federation, concerning endowing the Ministry of Economic Development with the powers to approve certain regulatory acts on the issues of maintenance of federal, territorial and departmental cartographic and geodetic funds. 

9. Introducing amendments to certain acts of the Government of the Russian Federation

The document has been submitted by the Ministry of Natural Resources and Environment.

The federal law, On Transferring Lands or Parcels of Land from one Category to Another, establishes (in Article 2) that in order to transfer lands or parcels of these lands from one category to another, the person concerned must submit an application to the executive body of power or local government body authorised to consider such petitions. The content of the application and the list of documents to be attached concerning the transfer of lands owned by the Russian Federation is established by the federal executive body authorised by the Government of the Russian Federation.

The draft resolution endows the Ministry of Natural Resources and Environment with the power to adopt acts determining the content of applications for the transfer of water resources lands, and lands of protected territories and objects (specially those of protected natural territories), or parcels of land within such lands to other categories, while simultaneously removing this function from the list of the powers of the Ministry of Economic Development of Russia. The draft resolution will also empower the Ministry of Natural Resources and Environment to consider materials justifying the transfer of lands of these categories or parcels of land within such categories to other categories of land.

Pursuant to the above proposals, corresponding amendments are to be introduced into the statutes on the Ministry of Natural Resources and Environment and the Ministry of Economic Development approved by the acts of the Russian Government.

10. Concerning the annulment of Subparagraph 5.6.3 of the Statute on the Ministry of Agriculture

The material has been submitted by the Ministry of Agriculture. The draft resolution would exclude from the jurisdiction of the Ministry of Agriculture the function of keeping track of wildlife belonging to species entered into the special lists of domestic animal and plant pests (with the exception of forest pests).

In connection with this draft resolution, subparagraph 5.6.3 of the Statute on the Ministry of Agriculture of the Russian Federation, approved by the Russian Government Resolution No.450 of June 12, 2008 has been repealed.

Moscow, August 22, 2011

* Press releases by the Department of Press Service and Information are based on the materials submitted by the executive federal bodies for discussion by the Government meeting.