Mr Kudrin said that the 2009 budget was "in compliance with the Government's economic policy objectives and planned expenditures." He said that the budget anticipated that Government expenditures would be growing at a higher rate than the GDP and inflation growth rates. "The expenditures planned for 2009 are not excessive and they do not need to be reduced," said Mr Kudrin. He reminded that the Government could use additional resources from the Reserve Fund, if necessary. Mr Kudrin said that "it was envisaged from the outset that at a time of crisis the Reserve Fund would be used."
At the same time, Mr Kudrin admitted that "budget revision was possible at the beginning of the year, depending on the inflation and tariff indicators." He stressed that the budget had a sufficient "safety margin" and therefore "additional resources could be directed toward social programmes due to inflation."
He also reminded that oil and gas revenues would significantly decrease next year. This year, proceeds from oil and gas amounted to half of the budget's revenues, whereas next year the share of oil and gas revenue is planned at 30 percent. Still, "this share may shrink even further, as we believe that oil prices will fall more than anticipated in the budget," Mr Kudrin said.
The Finance Ministry predicts that "the average oil price in 2009 will be $55 per barrel and $60 - in 2010."
Mr Kudrin said that the falling oil prices will not affect the execution of the budget. However, the Reserve Fund and the National Welfare Fund may not get replenished next year.
Nevertheless, the Finance Ministry is not planning to revise the long-term average oil price forecast of $65 to $70 per barrel included in the budget strategy for the period up to 2023. Mr Kudrin said that the Government's 15-year budget strategy anticipated an annual oil production increase of 0.5%, and gas production increase of 1.9%.