The following issues are scheduled for discussion at the Government meeting on August 21, 2008:
1. Preliminary results of Russia's socio-economic development in the first half of 2008, socio-economic development forecast for 2009 and the planned period of 2010-2011
Economic growth rate in Russia remained high in the first half of 2008. According to the Ministry of Economic Development, GDP grew 8.0% from January to June 2008 compared to the same period last year. However, sustained growth in January-April gave way to a slowdown in May and June, with the GDP growth of 7.6% in the second quarter against 8.5% in the first quarter.
Analysis of the monthly GDP growth (without seasonal and calendar factors) shows that it slowed down from 0.8% in the first quarter to 0.5% in the second quarter due to slower dynamics in investment, construction (in particular, housing projects), and industrial production (mainly manufacturing).
Industrial growth totalled 5.8% in the first half of 2008 compared with the same period of 2007. However, the dynamics were highly volatile, with maximum growth in January (9.2%) and minimum in June (0.9%). That volatility is confirmed by the dynamics of the average monthly growth without seasonal and calendar factors, with a growth rate of 1.1% in February and 0.9% in June. The overall decline was due to a slowdown in growth for manufacturing.
The growth of real disposable incomes of the population in the first half of 2008 was 8.1% compared with the previous year, with a significant slowdown in the second quarter, to 6.9% from 9.4% in the first quarter. Accelerated growth of prices negatively affected the growth of real incomes, which showed a higher pattern of development in January-June, 13.0%, or 13.4% in the first quarter and 12.7% in the second quarter.
Unlike the investment sector, the consumer market showed sustained growth despite a slowdown in the number of consumer loans. Retail trade was growing faster than monetary incomes of the consumer in January-June 2008, with the growth of consumer demand supported by the decrease in the norm of people's savings.
According to the Bank of Russia, exports in January-June 2008 grew 54.4% year on year (8.0% in January-June 2007), mainly due to the rise in oil prices. Imports increased by 41.5% (36.8% in the first half of 2007), above all because of energetic growth of investment and consumer demand and an increase in import prices in US dollars.
In the first half of 2008 (June 2008 compared with December 2007), the rouble strengthened by 8.45% against the dollar. The real effective rouble exchange rate grew 2.9%, according to the Bank of Russia.
In light of extremely high prices of Russia's main exports, the country's international reserves increased by $90.396 billion in the first half of the year ($102.108 billion in January-June 2007). As of July 1, 2008, Russia's international reserve assets totalled $568.286 billion.
Inflation in the first half of the year was 8.7% (5.7% in January-June 2007). After prices soared monthly by 1.4% in April and May, inflation was only 1% on the consumer market in June, the same as in June 2007. The growth of food prices slowed down by half in June, to 1.1%, after a hike of 2%-2.2% in the previous three months.
In the upcoming period, economic development will depend on the following basic factors and trends:
• Adjustment to the decreased global oil and metal prices, with limited possibilities of increasing the physical volumes of energy and basic commodity exports;
• Growing dependence of the balance of payments and economic growth on the inflow of foreign capital and the investment environment;
• Decreasing number of completed, technological projects in some high-tech sectors, and increasing need for spurring the innovation-investment component of growth;
• Need to modernise fixed assets of high-tech sectors and overcome limitations in infrastructure sectors (power generation, transport);
• Strengthening innovation-investment component of growth;
• Growing shortage of workforce, with a decrease in employable population, which began in 2008, complemented with a low level of unemployment;
• Growing competition on the domestic and foreign markets, coupled with a substantial decline of competitive price advantages due to the priority growth of wages, energy outlays, and rouble strengthening.
Factors influencing economic growth are expected to change dramatically in the forecast period.
The concepts of socio-economic development and forecast parameters until 2011 were drafted in two basic and two additional scenarios. The second scenario has been offered as the foundation for drafting the federal budget for 2009-2011.
The basic scenarios are based on the same target oil prices, with a gradual decrease of the price of Urals crude from $112 per barrel in 2008 to $88 in 2011.
The scenarios differ from each other above all by the forecast dynamics of Russian business competitiveness and effectiveness of state measures to promote the innovative nature of the Russian economy and its diversification.
Scenario One (inertial) forecasts Russia's economic development in conditions of slowing hydrocarbons exports and a relative decrease in the competitiveness of Russian goods, against the backdrop of a growing mortgage crisis in the United States and the global financial markets. This will affect investment, reduce the number of bank loans, and increase the share of imports in satisfying domestic demand. The GDP growth is expected to fall to 5.4%-5.9% in 2010-2011 from 8.1% in 2007.
Scenario Two (innovation-based) forecasts a relative improvement in Russian business competitiveness, sustained investment activity and implementation of a number of large infrastructure projects, sustained development of the banking system and an increase in its contribution to economic growth. The GDP growth is expected at 6.2%-6.7% in 2010-2011.
The innovation-based scenario stipulates an increase in spending on R&D (research and development), education and healthcare, and a growing efficiency of these sectors, influencing not so much the current economic growth rates, as the quality of economic growth, and will stimulate the Russian economy towards an innovation-based, socially-orientated development scenario.
The additional scenarios take into account different possibilities on the world's oil and other markets.
The influence of global economic conjecture, which was the motive force behind Russia's high growth rates in previous years, is decreasing.
In 2004, 42% of economic growth was due to external factors, but the figure for 2007 was only 26%. In the planned period, the influence of external factors on Russia's economic growth will stabilise at 1.3-1.5 percentage points of the GDP growth, ensuring only 22%-26% of the GDP growth.
The growth of exports in terms of value will depend on the restrained rise in prices of Russian oil and other fuel and energy exports. So, unlike in the past, economic growth will move ahead of the export dynamic, with external factors unable to support it at the forecast level.
The internal factors will increasingly influence both the level and stability of economic growth rates. This highlights the importance of investment environment and state economic policy.
According to the first scenario, the worsening external economic conditions will not be compensated by the improved quality of economic growth and Russian business competitiveness. This will reduce the growth rate to 5.4%-6.0% in 2009-2011.
To stabilise economic growth rate at 6%-7% annually, which corresponds to the second scenario, the Government should dramatically increase the efficiency and competitiveness of the national economy and increase the investment components of economic growth.
Scenario Two (innovation-based) proposes the following:
- First, companies should operate more efficiently to enhance the competitiveness of their goods, cut outlays, introduce effective technologies, advance in new markets and take part in innovation and structural projects jointly with the state. Increased competitiveness implies a higher growth rate in private investments, a more dynamic growth of exports (especially in manufacturing), and a relatively low elasticity of import against the domestic demand.
- Second, develop elements of a national innovative system, and increasing investment in human capital.
- Third, pursue a more active social policy (including in the budget-financed sectors), which should restrain the growing differentiation of incomes.
- Fourth, effectively use the instrument of state investment to develop the energy and transport infrastructure, implement highly effective innovation projects and priority branch strategies and programmes (including programmes to develop civil marine equipment, civil aviation, the federal space exploration programme, the strategic materials production programme, etc.).
An accelerated growth of consumer incomes, which is forecast in the second scenario, will also boost the demand. This development, along with other social factors of economic growth, will contribute up to 0.2 percentage points to the GDP growth.
Increased investment in the development of Russia's innovative system and human capital is a crucial factor for an increase in economic efficiency. In 2009-2011, budgetary and private financing of R&D, education and healthcare, as well as innovation activities, are due to be increased.
Private financing in healthcare and education is expected to grow in the mid-term period, with a priority growth of budgetary expenditures. Allocations to education will grow to 5.6% of GDP in 2009-2011 from 4.8% in 2008. This growth is coupled with the beginning of reforms, including innovation tuition programmes in education, development of research universities, programmes of support for talented youth and children, education for people with disabilities, uninterrupted education, and modernisation of professional training and retraining. These reforms call for an increase in education spending to 5.6%-5.8% of GDP in 2011.
Oil production. Due to decreases in its performance, oil production may amount to 492 million metric tonnes in 2008. In view of a weakening structure and quality of explored reserves and transition to brown field development in West Siberia, the first scenario predicts stabilisation of oil production at 497-500 million metric tonnes in 2009-2011. Under this scenario, the approved tax innovations are unlikely to help increase oil production in the new oil provinces such as East Siberia and the Republic of Sakha (Yakutia), with the overall tax burden having a negative influence on investment in the development of new deposits.
The second scenario forecasts oil production at 503 million metric tonnes (102.2% of the previous year) in 2009 and 518 million metric tonnes (100.8% of the previous year) by 2011.
The growing influence of the approved and planned tax innovations is expected to increase the contribution of new provinces such as East Siberia and Sakha (Yakutia) to overall oil production. The drop in oil production in West Siberia is expected to be mitigated by the improved organisation of production and transition to the development of smaller, but more complicated deposits, as well as the beginning of oil production in the Russian sector of the Caspian Sea.
This scenario takes into consideration the possibility of linking Transneft's oil pipeline system to the pipeline of the Caspian Pipeline Consortium (CPC), as well as increasing the capacity of the CPC pipeline.
Oil and oil products export. Under the first scenario, oil export is expected to grow from 253 million metric tonnes in 2009 to 256 million tonnes in 2010-2011.
Under the second scenario, oil export will grow from 255 million metric tonnes in 2009 to 262 million tonnes in 2011, due to the demand for oil in Europe and additional oil export to Asia Pacific through the East Siberia-Pacific Ocean pipeline. The growth rate of oil export is expected to slow down due to an increase in domestic oil processing and a decline in the rate of oil production growth.
The first scenario forecasts a decline in the export of oil products due to stabilisation of oil production and the growing domestic demand. In 2009-2011, the export of oil products is expected to fall from 111.7 million metric tonnes to 107 million metric tonnes.
Under the second scenario, the planned measures to modernise oil refineries, increase the production of quality petrochemicals, and build oil refineries and petrochemical plants should create conditions for increasing the export of oil products from 115.4 million metric tonnes in 2009 to 117.8 million metric tonnes in 2011.
Inflation. In order to lower inflation, measures are being taken to stabilise the food market - notably, cut import duties and raise export duties on some commodities that may spur inflation - and to stimulate competition. Since prices of grain and some other goods have fallen on the global market this year, it can be expected that the growth of domestic food prices will decrease to 2% in the second half of the year from 8.9% the year before.
However, the monetary component of inflation has grown in 2008 due to a high growth rate of money supply last year and high inflation expectations.
Aiming to lower inflation, a comprehensive mid-term programme comprising two groups of measures has been devised.
The first group comprises measures to stimulate the supply of goods and promote competition (in particular, within the food and agricultural markets), develop trade infrastructure, and contain the rise of costs, by creating, amongst others, new market instruments to restrain the growth of natural monopolies' tariffs amid the circumstances of growing deregulation, the struggle against oligopoly, and attempts made to create a competitive environment (in the petrochemicals and other material resource markets).
For a restraint on monetary inflation in the mid-term, the growth of money supply must be limited, while consumers must be encouraged to save, and not spend. To restrain non-monetary inflation, supply of goods must be increased, competition encouraged, and expenses curtailed.
The second group of measures comprises budgetary and monetary policies aimed at lowering the monetary component of inflation through the cessation of money supply growth, encouragement of consumers to save, and regulation of demand.
As a result of pursuing an anti-inflation policy, target inflation will go down to 7.0%-8.5% in 2009, 5.5%-7% in 2010, and 5%-6.8% in 2011. These efforts will be facilitated by the decline of global oil prices in 2009-2011, which are forecast in the second basic scenario.
It is expected that these measures, as well as a decline in the growth rate of the consumer demand and money supply, will lower the monetary component of inflation. A more radical suppression of inflation through the application of a monetary and credit policy would slow the growth of consumption and investment and, consequently, economic growth as a whole.
Currency reserves. Currency reserves will grow by as much as $174 billion in 2008, all other conditions being equal, to $650 billion. As a result of a squeeze on the current account balance, the growth of reserves may slow down to $20-$25 billion by 2011.
The second additional scenario envisions more difficult external conditions for Russian economic development, notably a fall in oil prices to $75 per barrel by 2011 and an annual capital inflow of no more than $50 billion. Given these conditions, the current-account deficit will grow to $140 billion by 2011, and the projected capital inflow will be insufficient to prevent a decline in foreign currency reserves. At the same time, the nominal rouble rate will fall faster than under the second scenario.
Export and import. In the past few years, the value of trade balance depended more on changes in trade conditions than on the dynamics of trade. In 2003-2008, the aggregate price of exports grew more than two-fold compared with the aggregate price of imports, above all because of growing oil prices.
The accelerated growth of oil prices has dramatically increased the money value of exports in 2008. It is expected that annual exports will total $525 billion this year. The nominal growth of exports will exceed 48%, although the growth of their physical volume will barely reach 3%. The value of imports in US dollars will grow 38%, primarily due to a physical increase in imports by 23%.
Trade conditions are expected to deteriorate in 2009-2011 following the falling oil prices, and will be 13% worse by 2011 compared with 2008. This will slash the value of a positive trade balance. By 2011, the surplus will decrease to less than $20 billion from $217 billion in 2008.
Exports. After taking a plunge in 2008, exports will fluctuate between $502 billion and $510 billion in 2009-2011, with the annual physical growth between 2% and 4%. The export of engines, equipment and vehicles is expected to grow fastest (by 60%), and foodstuffs and agricultural raw materials by 40% by 2011 compared with 2007. After a decline in 2008, the export of fuel and energy will experience a slight growth, by 1%-2% annually.
Imports. Imports are expected to grow to $490 billion in 2011 from $223 billion in 2007. The rate of growth will slow down from 23% in 2008 to 11.5% in 2011, due to a decline in the domestic demand and the speed of rouble strengthening, as well as to the dynamics of consumer imports, as there is a potential for redirecting the domestic demand to Russian-made goods.
The latter process is expected to begin in the food industry, consumer electronics and automobile manufacturing.
Therefore, imported consumer goods will be gradually replaced with Russian-made goods, and the growth of such imports will decrease from 16% in 2007 to 7% in 2011.
The greater number of imports will comprise high-tech products (the share of investment commodities in the structure of imports will grow from 27.6% in 2007 to 31.4% in 2011) and interim products (growth from 34.7% to 37.7%).
Investment in fixed capital. The tempo of investment activity will remain high in 2008-2011, with the average annual increase in investment in fixed capital expected at 12%-14%. By 2011, such investment should grow 60%-70% compared with 2007, depending on the development scenario.
2. The Draft Federal Law On the Federal Budget for 2009 and the Planned Period of 2010-2011
The main objectives of the budget and tax policies in 2009-2011:
• Use the budget policy as a key instrument of macroeconomic regulation and balanced economic development;
• Increase its role in stimulating long-term growth of the economy and standards of living;
• Ensure balance and sustainability of the budget system;
• Create tax incentives for stimulating investment in human capital, including education and healthcare, and facilitating knowledge-based development;
• Improve the efficiency of the tax system and encourage its integration into the global tax system;
• Radically increase the efficiency of budget spending, including by restructuring the budget sector and taking measures to improve the quality of state services and spur the growth of labour productivity in the public sector;
• Create a stable and sustainable pension mechanism;
• Develop mechanisms of public-private partnership;
• Ensure maximum effectiveness of development institutions;
• Increase financial transparency of the public sector.
The budget and tax policies are aimed at restoring the balance of economic development, and are thus playing an important role in restraining inflation.
The budget and tax policies for 2009-2011 have been for the first time fully formulated, and will be applied, on the basis of a floating three-year plan, which will ensure predictability and succession, and will encourage measures to achieve the strategic goals of state policies. This plan also encourages the use of financial resources and regulation measures jointly and effectively for the attainment of priority goals.
At the same time, the horizons of budget planning should be further expanded to obtain long-term budget stability and strengthen the role of the budget in economic development.
For this reason, the Government has begun drafting a long-term budget strategy until 2023.
Long-term budget planning will allow the formulating of long-term priority goals of budget policy whose attainment entails the use of different financial instruments, including mobilisation of budget resources.
In 2009-2011, the volume of revenue and expenditure of the federal budget will grow considerably, whereas their share of GDP will decrease.
Basic parameters of Russia's budget system
|
|
2009 |
2010 |
2011 |
|
Incomes, total |
18,310.4 |
20,146.1 |
22,378.5 |
|
% of GDP |
35.6 |
34.1 |
33.1 |
|
Federal budget |
7,945.1 |
8,112.5 |
8,837.3 |
|
Budgets of state extra-budgetary funds* |
3,320.8 |
4,186.2 |
4,796.0 |
|
Consolidated budgets of federation members* |
6,527.0 |
7,260.3 |
8,083.4 |
|
Territorial funds of compulsory medical insurance* |
517.5 |
587.1 |
661.8 |
|
Expenditures, total |
16,371.4 |
18,693.3 |
20,797.7 |
|
% of GDP |
31.8 |
31.6 |
30.8 |
|
Federal budget* |
6,042.7 |
6,699.2 |
7,316.0 |
|
Budgets of state extra-budgetary funds* |
3,334.9 |
4,187.1 |
4,776.5 |
|
Consolidated budgets of federation members* |
6,476.3 |
7,219.9 |
8,043.4 |
|
Territorial funds of compulsory medical insurance |
517.5 |
587.1 |
661.8 |
|
Surplus/deficit, total |
1,939.0 |
1,452.8 |
1,580.8 |
|
%% of GDP |
3.8 |
2.5 |
2.3 |
• with inter-budgetary transfers
The proposed parameters will balance the federal budget in the mid-term.
The differences between the forecast federal budget revenue in 2009 and 2010 and the previously approved parameters are largely due to changes in the target oil prices.
3. The Budget of the Pension Fund for 2009 and the Planned Period of 2010-2011
The Budget of the Pension Fund for 2009 and the Planned Period of 2010-2011 was drafted in accordance with the Budget Code, on the basis of the guidelines of Russia's socio-economic forecast for 2009 and the planned period of 2010-2011.
The Pension Fund's 2008 revenue was stipulated at 3.2175 trillion roubles (6.3% of annual GDP forecast at 51.475 trillion roubles) and spending at 2.9111 trillion roubles (5.7% of annual GDP).
Spending on the payment of the basic portion of labour pensions, state pensions, and monthly payments to certain groups of people has been calculated in accordance with the specified consumer price indices, as well as the provision according to which the social pension is to be increased to pensioners' subsistence level in 2009.
The item takes into account allocations from the 2009 federal budget for current expenditures, notably to increase compensation payments for taking care of people with disabilities to 1,200 roubles from 500 roubles and burial allowance to 4,000 roubles from 1,000 roubles, with subsequent indexation depending on forecast inflation.
The item also covers allocations from the 2009 federal budget for new commitments:
- the payment of the insurance component of labour pensions, in view of the addition to the insurance costs of uninsured periods of taking care of people with grave disabilities, children with disabilities, or persons aged 80 and older; this also concerns periods when spouses of servicemen as well as diplomatic and consular staff live in places where they cannot find employment;
- the payment of the insurance component of labour pensions to servicemen and federal state officials;
- the increase in length-of-service pensions of federal state officials.
Under Article 5 of the Federal Law On Mandatory Pension Insurance in the Russian Federation, the costs generated from the payment of the insurance component of labour pensions unsupported by insurance contributions is to be financed by the federal budget allocations to the Pension Fund provided for compensating the Fund's budget deficit.
4. The Budget of the Social Insurance Fund for 2009 and the Planned Period of 2010-2011
Revenues of the Social Insurance Fund are forecast at:
• 2009: 445.1336 billion roubles; transfers from the federal budget - 70.5684 billion roubles;
• 2010: 520,5788 billion roubles; transfers from the federal budget - 89.3692 billion roubles
• 2011: 591.3879 billion roubles; transfers from the federal budget - 114.1943 billion roubles.
The draft budget of the Fund takes into account revenues from the Unified Social Tax transferred to the Fund, 277.3883 billion roubles in 2009, 321.8642 billion roubles in 2010, and 356.3022 billion roubles in 2011.
Revenues from taxpayers with special tax regimes transferred to the Fund have been stipulated at 12.5068 billion in 2009 (up 2.2191 billion roubles from the sum stipulated in the budget), 14.3283 billion in 2010 (up 2.1244 billion roubles), and 16.2460 billion roubles in 2011.
The growth in spending on the mandatory social insurance against the approved figure is primarily due to increased expenses from the payment of allowances (public normative obligations) on account of the growth of the wage fund and the number of recipients.
Spending amassed from the payment of temporary disability benefits was calculated on the basis of the Federal Law On the Provision of Allowances under the Mandatory Social Insurance of People Working in Organisations and Small Businesses with Special Tax Regimes, and Some Other Categories of People. The minimal wage for 2009 was set at 4,330 roubles. Additional spending in 2009 resulting from the growth of the minimum wage have been stipulated at 3 billion roubles. In the subsequent years, the growth of the minimum wage is to be adjusted to the rise in consumer prices, up 3 percentage points annually.
Spending on prenatal and childbirth allowances include the payment to women who adopt a child (or children) aged up to three months.
The draft budget stipulates maximum temporary disability allowances of 18,720 roubles in 2009, 20,030 roubles in 2010, and 21,390 roubles in 2011. Maximum prenatal and childbirth allowances are stipulated at 25,390 roubles, 27,170 roubles, and 29,020 roubles, respectively.
Spending on the monthly payment of childcare allowances until the child is 18 months old to people subject to mandatory social insurance, childbirth allowances and one-off allowances to women registering with medical establishment at the early stages of pregnancy is calculated in accordance with the Federal Law On State Allowances for People with Children, with annual adjustment to the consumer price index of the given year, and to an increase in the number of recipients in view of the forecast growth of the birth rate.
The draft budget stipulates additional spending to increase social allowances for burial from 1,000 roubles to 4,000 roubles as of January 1, 2009. Such allowances for subsequent years are to be increased annually, in correspondence with the consumer price index, including 107.0% in 2010 and 106.8% in 2011.
Spending on children's healthcare considers payment for 5.3 million vouchers to different types of health resorts for children of insured citizens. Such allocations from the mandatory social insurance fund are stipulated at 19.5384 billion roubles in 2009, 21.7019 billion roubles in 2010, and 23.9983 billion roubles in 2011.
Allocations for the rehabilitation of insured citizens after hospital treatment at sanatoriums in Russia are stipulated at 4.7123 billion roubles in 2009, 5.0421 billion roubles in 2010, and 5.385 billion roubles in 2011. This will suffice to pay for 185,000 vouchers for the insured citizens annually.
The draft budget stipulates allocations for the construction of two rehabilitation centres of the Fund in the Far Eastern Federal District, one for 200 and the other for 100 people, in a bid to create a comprehensive system of medical rehabilitation for the insured citizens damaged in accidents at their workplace. Allocations are stipulated at 280 million roubles in 2009, 350 million roubles in 2010, and 130 million roubles in 2011.
The draft budget stipulates that the sum for calculating the size of once-off insurance payment under the mandatory social insurance of employment injuries and occupational diseases shall be set at 56,200 roubles in 2009, 60,100 roubles in 2010, and 64,200 roubles in 2011.
Spending on in-depth medical checkups of personnel at health-hazardous and/or dangerous jobs is stipulated at up to 2 billion roubles annually in 2009-2011.
5. The Budget of the Federal Mandatory Medical Insurance Fund for 2009 and the Planned Period of 2010-2011
The Budget of the Federal Mandatory Medical Insurance Fund for 2009 and the planned period of 2010-2011 is balanced in terms of revenue and spending, and will amount to 119,313,242,000 roubles in 2009, 137,958,769,000 roubles in 2010, and 157,923,335,000 roubles in 2011.
Planned revenues from the Unified Social Tax will be 109.3709 billion roubles in 2009, 127.5722 billion roubles in 2010, and 146.9867 billion roubles in 2011.
Inter-budgetary transfers from the federal budget to the Federal Mandatory Medical Insurance Fund have been specified to take into account the expected assessment of the fulfilment of the Fund's budget in 2008, and the transfer from its 2008 budget to the 2009-2011 budgets of spending on monetary payments to primary care medics in view of changes in the mechanism of providing such payments to federation members since 2009.
Specified inter-budgetary transfers will be set at 8,650,806,000 roubles in 2009, 8,905,074,000 roubles in 2010, and 9,238,619,000 roubles in 2011, including for:
• Mandatory medical insurance of non-working population (children). Planned allocations for 2009-2010 correspond to the figures approved in the Federal Law On the Budget of the Federal Mandatory Medical Insurance Fund for 2009 and the Planned Period of 2010-2011. Requirements of 4,347,870,700 roubles of budget allocations in 2011 have been calculated with consideration for the adjustment of the 2010 figure to forecast consumer prices;
• Additional medical checkups of working people, 4 billion roubles annually;
• Spending on medical checkups of orphans and children with social problems living in boarding houses (540,000 children) has been increased by 507,856,800 roubles in 2009 and 492,834,00 roubles in 2010. Allocations for 2011 are stipulated at 890,748,300 roubles.
6. Insurance rates of mandatory social insurance against employment injuries and occupational diseases for 2009 and the planned period of 2010-2011
Insurance rates of mandatory social insurance against employment injuries and occupational diseases for 2009 and the planned period of 2010-2011 were calculated on the basis of socio-economic development forecast until 2011.
Policyholders will pay insurance rates of mandatory social insurance against employment injuries and occupational diseases in 2009 and in the planned period of 2010-2011 at the rates and in accordance with the procedure stipulated in the December 22, 2005 Federal Law On Insurance Rates of Mandatory Social Insurance against Employment Injuries and Occupational Diseases for 2006.
The terms of calculating and the size of tariffs made effective in 2008 will also remain effective in the target period.
The current methods of calculating and establishing insurance rates are based on the principle of equivalent obligations of policyholders and insurers, with the size of all insurance contributions covering all payments made to compensate occupational damage to policyholders.
Total spending on fulfilling the stipulated commitments in the Federal Law On Mandatory Social Insurance against Employment Injuries and Occupational Diseases will be set at 56.9283 billion roubles in 2009, 61.3752 billion roubles in 2010, and 65.4288 billion roubles in 2011. It will include spending on temporary disability allowances for employment injuries and occupational diseases, once-off and monthly insurance compensations, spending on medical, social and professional rehabilitation of victims, on measures to reduce work-related accidents and occupational diseases, and other spending.
With the 2008 insurance rates for professional risk groups unchanged in 2009 and the planned period of 2010-2011, the average insurance rate in accordance with the current Classification of Types of Economic Operation by Professional Risk Groups will be 0.5% of the imputed wage. Collection of insurance payments (including arrears) will amount to 65.6772 billion roubles in 2009, 74.0331 billion roubles in 2010, and 82.4307 billion roubles in 2011, enough for insuring and financing other expenses of the Social Insurance Fund stipulated by legislation. The positive balance of insurance payments and spending will be used to ensure stability of the system of mandatory social insurance against employment injuries and occupational diseases during the improvement of this type of insurance.
7. Draft guidelines of the unified state monetary-credit policy for 2009 and the planned period of 2010-2011
The Guidelines of the Unified State Monetary-Credit Policy for 2009 and the Planned Period of 2010-2011 comprise the main goals of the Bank of Russia in the specified period in accordance with the Government's economic policy, and stipulate measures of the monetary-credit policy aimed at attaining the aforesaid goals. The Guidelines' period coincides with the period of the federal budgets for the aforesaid period.
The Bank of Russia and the Government proceed in the scenarios of economic development for 2009 and the planned period of 2010-2011 from the common assessment of external and internal conditions of economic operation. The main goal of the monetary-credit policy in the upcoming three-year period will be to gradually lower inflation to 5%-6.8% in 2011 (December on December).
The Bank of Russia intends to predominantly complete the transition to an inflation-targeting regime in the aforesaid period, which means focusing on measures to lower inflation. However, the monetary-credit policy in the immediate future will largely retain the features of the previous years, with continued control of the floating rouble exchange rate, and use of the money programme to monitor compliance of monetary-credit figure with target inflation, and of the bi-currency basket as the operational guideline of the currency exchange policy. Decisions to change the policy will be taken after careful consideration of a broad range of economic indicators.
Oil prices on the global energy markets are a crucial factor influencing Russia's economic development. Therefore, the Bank of Russia considered four variants of conditions for pursuing its monetary-credit policy in 2009-2011, three of them based on governmental forecasts.
Under the first variant, which was considered as an addition to the governmental forecasts, the average annual price of Russian oil is expected to fall to $66 per barrel in 2009.
In this event, the current account balance can be negative, with the real disposable income of the people growing by 8.1%, investment in equity by 10%, and GDP by 5.7%
Under the second variant, prices of Urals crude will fall to $90 per barrel in 2009, which entails a decrease in the positive current account balance by nearly 70%, and a considerable slowdown in the growth of currency reserves.
If external conditions deteriorate, the growth of basic economic indicators will slow down in 2009, compared with the previous year. Real disposable incomes of the population may grow 9.9%, and the growth of investment in equity may slow down to 14%, while GDP may grow by 6.4%.
According to the third variant, on which the draft federal budget is based, prices of Russian crude will fall to $95 per barrel in 2009.
In this event, the volume of export of goods and services will be almost the same as in 2008, while import will grow. The positive current account balance will be larger than under the second variant. The growth of currency reserves will slow down, although not as severely as under the second variant.
This scenario provides for measures to encourage transition to innovation-based development, which should keep investment activity high in 2009, with investment in equity growing 14.5%. The population's real disposable incomes will increase by approximately 10.5%, and the economic growth pace is expected at 6.7%.
Under the fourth variant, prices of Russian oil will be $115 per barrel in 2009. In this case, the positive current account balance will be larger and the growth of currency reserves higher than under the third variant.
Given a considerable improvement in external conditions, the growth rate of the basic economic indicators will be higher than under the third variant. The population's real disposable incomes will grow by 11.1%, investment in equity by 15.2%, and GDP by 7.1%.
According to the mid-term forecast, prices of Russian oil in 2011 may be $60 per barrel under the first variant, $75 under the second variant, $88 under the third variant, and $122 under the fourth variant. These will be favourable conditions for the country's economic development. Depending on the variant, GDP may grow 5.5%-7.1% in 2010-2011, which is higher than the growth forecast for the global economy.
Under the development scenarios and the guidelines of Russia's socio-economic development in 2009 and the planned period of 2010-2011, the Government and the Bank of Russia have formulated the task of lowering inflation to 7.5%-8.5% in 2009, 5.5%-7.0% in 2010, and 5.0%-6.8% in 2011 (December on December). In terms of general consumer price inflation, this goal corresponds to the basic inflation of 6.7%-8.0% in 2009, 4.5%-6.2% in 2010, and 4.5%-6.1% in 2011.
Calculations for the monetary programme for 2009-2011 are based on the figures for monetary demand corresponding to inflation targets, forecast growth rates of GDP and its components, as well as the dynamics of exchange rates taken into account in the balance of payments forecast.
The mid-term currency exchange policy of the Bank of Russia will be aimed at creating conditions for applying a model of monetary-credit policy based on inflation targeting and gradual reduction of direct interference in exchange rates.
The Bank of Russia will continue to use the bi-currency basket comprising euro and US dollars as the operational indicator of the exchange policy during the transition to a floating exchange rate. This will allow formulating a balanced reaction to mutual fluctuations of exchange rates of the main global currencies and, consequently, smoothing over fluctuations in the nominal effective exchange rate of the rouble.
Mid-term trends in the rouble exchange rate will depend on the movement of money as part of foreign economic operation influenced by external factors and the restructuring of the Russian economy.
If the conditions stipulated in the main macroeconomic variants of Russia's development and the parameters of the implementation of its monetary-credit policy materialise, the growth rate of the real effective exchange rate of the rouble will gradually slow down.
In 2009-2011, the Bank of Russia will continue to interact with the Finance Ministry in the implementation of the monetary-credit policy and development of the national financial markets. In particular, the mechanism of placing temporarily free budget money with the deposits of lending organisations, used in 2008, will be applied as an additional method of providing liquidity to the banking sector at the time of its shortage.
Moreover, the Bank of Russia will work to implement, in joint cooperation with the Ministry of Finance, measures to improve the market of state bonds, which will help to raise the efficiency of Bank of Russia's operations with state securities aimed at regulating money supply.
Moscow
August 20, 2008
* Press releases by the Department of Press Service and Information contain the materials submitted by the executive federal bodies for discussion by the Government of the Russian Federation.
