The following issues are scheduled for discussion at the Government Presidium meeting on June 2, 2008:
1. The draft Federal Law On Amendments to the Federal Law On the Federal Budget for 2008 and the Planning Period of 2009 and 2010
The draft Federal Law On Amendments to the Federal Law On the Federal Budget for 2008 and the Planning Period of 2009 and 2010 has been prepared based on the federal budget implementation report for the first quarter of 2008, scheduled budget implementation in 2008 and adjusted forecasts for social and economic development of the Russian Federation for the planning period of 2009 and 2010.
Pursuant to the draft, budget revenues will constitute 8,965.7 billion roubles (21.23% of the GDP) in 2008, 9,518.3 billion roubles (19.58% of the GDP) in 2009, and 10,402.4 billion roubles (18.68% of the GDP) in 2010.
Oil and gas revenues in the budget will amount to 4,249.0 billion roubles (10.06% of the GDP) in 2008, 3,640.2 billion roubles (7.49% of the GDP) in 2009, and 3,630.9 billion roubles (6.52% of the GDP) in 2010, exceeding by 778.3 billion roubles, 531.7 billion roubles, and 639.9 billion roubles, respectively, the amount set forth in the key budget figures for 2008 and for the planning period of 2009 and 2010, as approved by the Federal Law On the Federal Budget for 2008 and the Planning Period of 2009 and 2010, as amended by Federal Law No. 19-FZ of March 3, 2008.
The increase in revenues, not including oil-and-gas revenues, will amount to 130.5 billion roubles in 2008, 280.4 billion roubles in 2009, and 354.3 billion roubles in 2010.
The aggregate balance of sources of budget deficit financing in 2008 will amount to 170.3 billion roubles, or 10.1 billion roubles less than the amount set forth by the Federal Law On the Federal Budget for 2008 and the Planning Period of 2009 and 2010, as amended by Federal Law No. 19-FZ of March 3, 2008.
The draft contemplates an increase in the total volume of budget expenditures from the approved figures by 120.4 billion roubles (1.7%) in 2008, 463.9 billion roubles (5.6%) in 2009, and 632.7 billion roubles (7.0%) in 2010.
Pursuant to Article 213, Clause 2 of the Fiscal Code of the Russian Federation, an increase in the total budget revenues in the planning period (not including oil and gas revenues or revenues from management of funds of the Reserve Fund and the National Welfare Fund) shall be allocated for reducing the federal budget deficit, if the same is approved with a deficit, or to a corresponding increase in provisionally approved expenditures.
Accordingly, the draft law makes a provision for an increase in the provisionally approved expenditures in 2009, from 1,017.6 billion roubles (12.3% of the total budget expenditures) to 1,481.5 billion roubles (16.9%), and in 2010, from 1,349.2 billion roubles (14.9%) to 1,981.9 billion roubles (20.5%).
Pursuant to the provisions of the Russian Federation Fiscal Code, such financial resources shall be allocated in the course of drafting the Federal Law On the Federal Budget for 2009 and the Planning Period of 2010 and 2011. With that, the provisionally approved (undistributed) expenditures for 2010 should, in accordance with Article 1841 of the Fiscal Code, amount to at least 2.5% of the total budget expenditures (no less than 241.7 billion roubles).
Proceeding from the above, the draft makes a provision for an increase in budgetary allocations in 2008 in the amount of 287.8 billion roubles, particularly on account of the following:
• Increase in oil and gas revenues in the federal budget in the amount of 120.4 billion roubles (including the decrease in the balance of sources of budget deficit financing in 2008);
• Changes in budgetary allocations between 2008 and the planning period of 2009 and 2010 in the amount of 77.8 billion roubles, including reallocation of the Russian Investment Fund resources in the amount of 43.0 billion roubles;
• Saving (reduction) of budgetary allocations in 2008 in the amount of 59.6 billion roubles;
• Reduction in budgetary allocations from the Investment Fund in the amount of 30.0 billion roubles.
Thus, the amendments introduced by the draft law contribute to the budget balance in 2008 and over the planning period of 2009 and 2010.
2. Amendments to the federal laws on the budgets of the Pension Fund of the Russian Federation, the Social Insurance Fund of the Russian Federation, and the Federal Mandatory Medical Insurance Fund of the Russian Federation for 2008 and the Planning Period of 2009-2010
The Draft Law On Amendments to the Federal Law On the Budgets of the Pension Fund of the Russian Federation for 2008 and the Planning Period of 2009 and 2010 has been prepared in accordance with the Fiscal Code and Article 18 of the Federal Law On Mandatory Pension Insurance in the Russian Federation.
The draft provides for amendments to the key parameters of the Fund's budget for 2008 and the planning period of 2009 and 2010 following an adjustment of the forecast of social and economic development of the Russian Federation in 2008 and key parameters of Russia's social and economic development forecast for 2009 and for planning period of 2010 and 2011, also taking into consideration the decisions made on increasing pensions, benefits, and welfare payments in accordance with the anticipated consumer price levels.
The Federal Law On the Budget of the Pension Fund of the Russian Federation for 2008 and the Planning Period of 2009 and 2010 is amended as follows.
1. Increase in budgetary allocations transferred to the budget of the Pension Fund in 2008 for:
• Payment of base component of labour pension - from 827.37 to 833.66 billion roubles (+6.29 billion roubles);
• Payment of additional monthly financial security to certain categories of citizens of the Russian Federation in connection with the 60th anniversary of the Victory in the Great Patriotic War of 1941-1945 (pursuant to Decree of the President of the Russian Federation No. 363 of March 30, 2005) - from 13.02 to 13.22 billion roubles (+0.2 billion roubles);
• Payment of additional monthly financial security to persons disabled as a result of war injuries (pursuant to Decree of the President of the Russian Federation No. 887 of August 1, 2005) - from 642.72 to 669.94 million roubles (+27.22 million roubles).
The budgetary allocations for the above purposes have been increased following an update of the number of eligible recipients and adjustment of the average base component of labour pension amount in line with the public statistical accounting data.
2. Pursuant to the Decree of the President of the Russian Federation On Additional Measures of Rendering Social Assistance to Persons Looking after Disabled Persons, beginning July 1, 2008, the monthly compensation amount will be increased from 500 to 1,200 roubles. As a result, the budget funds to be transferred to the budget of the Pension Fund to make compensation payments to persons looking after disabled persons, will be increased from 2.84 to 7.65 billion roubles (+4.81 billion roubles) to take account of the higher number of eligible recipients.
3. Following upward revision of the 2008 inflation outlook from the budgeted 8.5% to 10.5%, the budgetary allocations covering monthly payments to certain categories of people were increased by a total of 4.71 billion roubles.
4. Expenditures to cover early labour pensions to those declared unemployed was revised upward from the budgeted projection to 2,284.91 million roubles (+255.42 million roubles due to an 8% off-schedule indexation of the pension insurance portion from August 1, 2008); expenditures to cover funeral payments to such citizens were revised upward to 267,600 roubles (+67,200 roubles). These expenditures will be financed within the limits of the federal budget funds allocated to the budgets of the Russian Federation constituent entities as subventions.
5. Expenditures related to material support for employees of the Russian Federation nuclear arms complex were adjusted from the budgetary allocations by 200.34 million roubles (following an increase in the number of eligible recipients), while at the same time increasing the budget funds allocated to the Fund for such purposes.
6. Subject to the adjusted 2008-2010 macroeconomic wage fund forecast, insurance premiums collections projected for 2008-2010 increased, including the 2008 figures: for payment of the insurance component of labour pension, by 72.04 billion roubles, for payment of funded component of labour pension, by 4.01 billion roubles.
7. Expenditures for payment of the insurance component of the labour pension were adjusted by 48.09 billion roubles to reflect an 8% off-schedule indexation of the insurance component of the labour pension beginning August 1, 2008, to be carried out in accordance with applicable laws and based on a predicted price rise index for the first six months of 2008.
8. In execution of the Federal Law On Supplementary Social Security for the Civil Aircraft Flight Crews, extra-fare insurance premiums for corporate employers using the labour of civil aircraft flying crews were increased by 166.9 million roubles to reflect the adjusted labour compensation fund for this category of employees.
9. The key figures of the Fund's budget relating to the formation of the funds to finance the funded component of the labour pension were adjusted to reflect the re-evaluation of parameters against the adjusted macroeconomic forecast for 2008-2010 and with due regard of the budget implementation results for 2007 and January-April of 2008.
10. The budget funds covering the Pension Fund's 2008 budget deficit were adjusted by 26.0 billion roubles (from 155.5 to 129.5 billion roubles), to reflect reallocation of those funds to financially support additional expenditures for pension and welfare payments funded out of the federal budget and with due regard of additional receipt of funds from the Pension Fund budget.
11. Changes in the Fund's budgeted expenditures for 2009 and 2010 will be taken into account in drafting the Federal Law On the Budget of the Russian Pension Fund for 2009 and the Planning Period of 2010 and 2011.
The draft Federal Law On Amendments to the Federal Law On the Budget of the Social Insurance Fund of the Russian Federation for 2008 and the Planning Period of 2009 and 2010 provides for an increase in certain social payments, and has been elaborated in accordance with the provisions of the draft federal law Amending Certain Legislative Acts of the Russian Federation in order to increase separate social payments and the value of the social service package, which provide for an indexation in the second half of 2008 of public welfare payments to citizens with children to 10.5% of the December-December CPI level (a 1.9 percentage point-increase) based on the key figures of the Russian Federation social and economic development forecast through 2010.
The draft makes a provision for an adjustment of the Fund's 2008 budget in terms of revenues and expenditures.
The draft law provides for an increase in the Fund's 2008 revenues by 10,594.2 million roubles, including an increase of 3,314.3 million roubles for mandatory medical insurance, an increase of 6,957.9 million roubles for mandatory social insurance against employment injuries and occupational disease, and an increase of 322.1 million roubles out of the federal budget funds transferred to the Fund's budget for the performance of state functions.
Projected wage fund growth in 2008 up to 10,166 billion roubles (103.2% of the amount specified in calculations of the budget approved by Federal Law No. 17-FZ of February 28, 2008) defines an increase in the unified social tax receipts credited to the Fund up to 232,171.6 million roubles (an increase of 3,078.1 million roubles).
Revenues generated from insurance premiums under mandatory social insurance against employment injuries and occupational disease increased to 55,254 million roubles (a 6,545.2 million rouble increase).
In accordance with the forecast, Russia's Federal Taxation Service generally increased the share of the cumulative tax receipts in the Fund's budget by 635.8 million roubles, while tax receipts under the simplified system of taxation will increase by 840.4 million roubles, and tax receipts from taxation of imputed income generated from certain types of activities will decrease by 225.7 million roubles. Unified agricultural tax receipts will increase by 21.2 million roubles.
Based on the actual implementation of the Fund's 2007 budget in terms of revenues generated from back taxes (arrears), fines, and penalties on insurance premiums in the amount of 134.2 million roubles, and the reduction dynamics of such receipts for all years, the revenues projected in this area are set at 100.0 million roubles.
Given the growing deficit of funds for mandatory social insurance, and in the absence of any approved regulation on stand-by funds for mandatory social insurance against employment injuries and occupational disease, the revenues generated from placement of temporary funds decrease by 117.0 million roubles.
Based on current data for the Fund's budget implementation in the first quarter of 2008, a provision is made for an increase of 180.0 million roubles in money sanctions (fines) for violating the Russian Federation's laws on state non-budget funds and specific types of mandatory social insurance (as to the Social Insurance Fund of the Russian Federation) and a 300.0 million roubles increase in capitalised payment receipts.
The amount of federal funds transferred to the Fund's budget for the payment of up to 18 months of child-care benefits to citizens not subject to mandatory social insurance was increased by 322.1 million roubles to allow for a benefit indexation planned for the second half of 2008 up to a 10.5% December-December CPI level (an increase of 1.9%) in accordance with macroeconomic indicators (of the Russian Federation's social and economic development). The total amount of federal funds to be transferred to the Fund's budget in 2008 will amount to 34,351.1 million roubles.
The draft law also provides for an increase in the Fund's 2008 expenditures by 10,490.7 million roubles.
Overall expenditures amounted to 375,548.4 million roubles, including increased mandatory social insurance and mandatory social insurance for employment injuries and occupational disease expenses, which amounted to 264,771.9 million roubles and 49,852.6 million roubles, respectively.
The operating deficit of the Fund in terms of mandatory social insurance is forecast at 22,516.7 million roubles, 5,873.7 million roubles higher than budgeted.
In determining the expenses for 2008, it was provided that the following benefits and allowances would be indexed from July 1, 2008 to a 10.5% December-December CPI level (a 1.9% increase): child birth grants, up to 18 months of child-care benefits (monthly) to citizens not subjected to mandatory social insurance, minimum and maximum 18-month child-care benefits to citizens subject to mandatory social insurance, and early pregnancy registration grants.
Temporary disability benefit payments are forecast, based on 2007 budget implementation and new macroeconomic indicators for the Wage Fund growth, at 134,059.6 million roubles, 5,251.9 million roubles higher than budgeted.
Temporary disability benefit payments under mandatory social insurance for employment injuries and occupational disease were estimated at 2,395.9 million roubles, which is 149.9 million roubles higher than budgeted.
Maternity allowance payments were also determined based on implementation of the Fund's 2007 budget and new macroeconomic indicators for the Wage Fund growth and forecast rise in births, and constituted 39,697 million roubles, 3,631.4 million roubles higher than budgeted.
Under the draft law, the amount for calculation of a one-off insurance compensation is set at 50,900 roubles for the first half of 2008 and at 51,800 roubles for the second half of 2008. The increase in this amount in the second half of the year is due to an additional 1.9% indexation to a 1.105 December-December CPI level.
The draft also sets the maximum monthly insurance compensation at 39,100 roubles for the first half of 2008 and at 39,840 roubles for the second half of 2008.
Under the draft, expenses for child health improvement will be increased to 16,545.2 million roubles (an extra provision of 299.5 million roubles) to maintain, after allowing for forecast inflation, child health improvement levels as planned (approximately 5.0 million children).
The draft law adjusts the Fund's budget revenues for the planning period of 2009 and 2010 providing for an increase in revenues generated from unified social tax receipts and collection of insurance premiums under mandatory social insurance against employment injuries and occupational disease due to adjusted macroeconomic wage fund indicators:
• In 2009 - 12,444.0 billion roubles (106.7% of the figure set in the approved budget);
• In 2010 - 14,683.0 billion roubles (108.2% of the figure set in the approved budget).
Amendments contemplated by the draft Federal Law On Amendments to the Federal Law On the Budget of the Federal Mandatory Medical Insurance Fund for 2008 and the Planning Period of 2009 and 2010 are made to reflect the adjustment of inter-budgetary transfers made from the federal budget, subject to fund balance as of January 1, 2008, resulting from under-utilisation in 2007 of budgetary allocations under the relevant expenditure items.
Revenues of the Mandatory Medical Insurance Fund will increase due to additional tax receipts as follows:
• in 2008 - by 2,785,400.0 thousand roubles;
• in 2009 - by 6,813,100.0 thousand roubles;
• in 2010 - by 9,533,600.0 thousand roubles.
Given the available fund balances as of January 1, 2008, due to under-utilisation of budgetary allocations in 2007, and subject to the anticipated implementation of the Mandatory Medical Insurance Fund's budget in 2008, it is proposed to reduce the amount of inter-budgetary transfers from the federal budget in 2008 by 1,328,795.9 thousand roubles.
It is also proposed to increase the inter-budgetary transfer from the federal budget to cover 2008 orphan health examination expenses by 23,131.0 thousand roubles due to the higher number of children to be examined in 2008-2010; in particular, health examinations are envisaged for orphans and children in difficult situations in care of inpatient healthcare, educational, and social security facilities.
With due regard of the above changes and adjustments, the Fund's overall revenues and expenses in 2008 will amount to 130,595,429.7 thousand roubles and 133,022,015.7 thousand roubles, respectively.
The Fund balance on January 1, 2008, in the amount of 1,160,934.8 thousand roubles, will be used as additional means to cover the increased fiscal deficit of the Mandatory Medical Insurance Fund's budget formed as a result of reduced inter-budgetary transfer from the federal budget.
It is proposed to use the extra revenues anticipated in 2008 in the amount of 2,785,400.0 thousand roubles to increase the funds under Part 6, Article 6 of the Federal Law, reserved in the Mandatory Medical Insurance (MMI) Fund's budget to financially support MMI territorial programmes run under the MMI framework programme. Therefore, additional allocations will be made to the budgets of the territorial MMI funds in the order provided for the use in 2008 of specific reserve stocks of the MMI Fund.
Overall Fund revenues for the planning period of 2009 and 2010 are forecast at 138,245,585.2 thousand roubles and 129,017,035.0 thousand roubles, respectively.
The Fund's expenditures in 2009-2010 were not increased, as additional tax receipts are anticipated in this period; thus, the Fund's budget surplus in 2009 is forecast at 18,257,927.0 thousand roubles and at 24,534,366.0 thousand roubles for 2010.
3. Establishment of the Government Commission on Control over Foreign Investments in the Russian Federation
The establishment of the Government Commission (hereafter - the Commission) and designation of an authorised body for control over foreign investments in the Russian Federation, is provided for by Federal Law No. 57-FZ of April 29, 2008, On Foreign Investments in Business Entities Strategically Important for Ensuring National Security and Defence (hereafter - the Federal Law) and Federal Law No. 58-FZ On Amending Certain Russian Federation Legislative Acts and Declaring Certain Provisions of the Russian Federation Legislative Acts Inoperative Due to the Enactment of the Federal Law On Foreign Investments in Business Entities Strategically Important for Ensuring National Security and Defence, for making decisions in reviewing foreign investor applications and approving agreements.
Under the Federal Law, the Prime Minister of the Russian Federation is the Commission's head.
Key functions of the Commission will include:
• review of applications for preliminary approval of agreements involving the establishment by a foreign investor or a group of people including a foreign investor of control over strategically important business entities, as well as applications for approval of the establishment of control over strategically important business entities in cases provided for by the Federal Law;
• making decisions on preliminary approval of agreements or approval of the establishment of control, including any refusal to render such approval;
• identification of obligations to be assigned to the applicant and making decisions to amend the agreement to ensure the performance of such obligations in cases provided for by the Federal Law.
The Federal Law lists 42 types of activities strategically important to ensure national security and defence, including:
• development, production, repair, and disposal of weapons and military equipment;
• development, production, repair, and flight tests of aircraft;
• servicing business entities on the register of natural monopolies in the areas listed in Article 4.1 of the Federal Law On the Natural Monopolies, except for natural monopolies in the areas of public telecommunications, public postal service, heat and electricity delivery through distribution networks (in the areas of: oil and petrochemicals delivered via main pipelines; pipeline gas transportation; railways; services at terminals, ports and airports; dispatch management services in the energy industry; waterway infrastructure use services);
• operations of a business entity listed under the Federal Law On Protection of Competition in the registry of business entities with a share in a certain goods market of more than 35% or occupying a dominant position in a certain goods market, and dominating in a certain territory;
• TV and radio broadcasting;
• exploration and/or mineral survey and mining in subsurface areas with federal status and others.
It is proposed to instruct the Ministry of Industry and Trade of the Russian Federation, together with the federal executive bodies concerned, to submit a draft resolution on the approval of the provision on the Commission and its composition, as well as on the designation of a federal executive body authorised to exercise control over foreign investments in the Russian Federation, to the Government of the Russian Federation in an established order.
May 30, 2008
Moscow
* Press releases by the Department of Press Service and Information contain the materials submitted by the federal executive bodies for discussion by the Presidium of the Government of the Russian Federation.
