Prime Minister Vladimir Putin holds a meeting of the government commission on budgetary planning for the upcoming fiscal year and the planning period
12 september 2011
Vladimir Putin’s introductory remarks:
Good afternoon, ladies and gentlemen.
We are entering the final stage of our work on the federal budget, on the draft federal budget for the next three years. The objectives of the commission’s present meeting are to prioritise budget policy, to finally coordinate the federal agencies’ positions on key indices, and to analyse the forecast of Russia’s socio-economic development for 2012-2014 as the basis for decision-making on the budget. In particular, we should determine our stance on the prices charged by natural monopolies. This is an essential question, and we cannot pass the draft budget without addressing it. I would like to say the following on this point.
We have just held an interim meeting, and I would like to put forth the following proposal. First, I should note that rates in Russia always increase on January 1. This creates expectations of inflation, and drives inflationary pressure from the very beginning of the year. That is why I propose to cap the increase in Russian Railways’ rates at 6% as of January 1, 2012. However, the company faces ambitious repair works to increase safety, so I propose to provide the company with additional assistance up to 40 billion roubles at this year’s end. All other increases will not take effect on January 1, 2012, but on July 1, 2012 – these include a maximum increase of 15% in gas prices and increases to keep pace with inflation on electricity, which includes grid maintenance and heating. This is in light of the fact that energy consumption declines in the warm season and consumers will find the higher prices easier to bear than in winter.
I call on the Energy Ministry, the deputy prime minister supervising it, and our other colleagues to prepare company managers for this change well beforehand – right now, in fact – so that they can adjust investment plans accordingly. Please note that we have earmarked up to 50 billion roubles for next year as investment project guarantees. Businesses can use these funds to address their priorities and prevent emergencies in the first six months of the year. We should also talk to regional governors about the power grid companies they are responsible for. This must be done well in advance.
Already on September 20 we will be discussing the final draft federal budget at a government meeting, and it will be submitted to the State Duma by October 1. I should point out that the budget was prepared in close cooperation with the Russian Popular Front. We discussed the problems and priorities of federal finances with its representatives. I would like to thank the Finance Ministry for its openness and active work. I hope our cooperation with all parliamentary parties will be just as constructive and efficient – I repeat, with all parliamentary groups. The government must be open to such a substantive dialogue.
I would now like to touch on several essential matters concerning the budget. First, the balance between revenues and spending remains the top priority in federal finances. We will have a deficit-free budget this year even, despite our cautious projections at the start of the year.
We expect this year’s federal revenues and expenditures to be around 11 trillion roubles each. The Russian economy is projected to fully overcome the consequences of the economic downturn by the beginning of next year and to continue to grow, providing stable revenues to the federal treasury.
The Finance Ministry forecasts next year’s federal revenues at 11.8 trillion roubles and expenditures at 12.6 trillion roubles, so we currently expect a deficit of 1.5% of GDP. I would like to remind you that we expected a 3.7-3.6% deficit this year, but we are finishing the year without a deficit. As I said, the forecasts for next year are only preliminary. I hope that positive macroeconomic trends will improve our prospects, and we will stay on this path of no deficits.
Second, when we began to draft the federal budget, we decided that it should be a development-oriented budget. We therefore prioritised government spending for the years to come. Our top priorities will be future-oriented research, introducing innovations, infrastructure support to boost economic growth, and promoting small and medium-sized businesses. Certainly, we will focus on investments in development and in the wellbeing of Russian families. The state will meet all of its social obligations to the nation.
The regional healthcare and education programmes will enter peak activity within a few years. Maternity capitals will certainly be further adjusted to keep pace with inflation. Military and police salaries and pensions will increase next year. We must solve the problem of providing permanent housing for service members. We will continue to work to improve housing for veterans. I am convinced that by focusing our efforts on these areas and measures we will considerably improve the lives of our citizens. This will strengthen the foundation for developing our nation’s human capital and help boost the qualitative growth of our economy.