The following issues are scheduled for discussion at the Government meeting on November 27, 2008:

1. The results of the federal budget implementation in nine months of 2008

Key federal budget implementation indicators for nine months of 2008

In 2008 the federal budget was implemented in accordance with Federal Law No. 198-FZ of July 24, 2007, On The Federal Budget for 2008 and for the Planning Period 2009 and 2010, Federal Law No. 19-FZ of March 3, 2008, On the Federal Budget for 2008 and for the Planning Period 2009 and 2010, Federal Law No. 122-FZ of July 22, 2008, On The Federal Budget for 2008 and for the Planning Period 2009 and 2010, Resolution of the Russian Federation Government No. 778 of November 14, 2007, On Measures to Implement the Federal Law On the Federal Budget for 2008 and for the Planning Period 2009 and 2010, and other regulatory acts to implement the same, as well as the consolidated federal budget spending report for 2008 and for the planning period 2009 and 2010.

The Federal Law On The Federal Budget for 2008 and for the Planning Period 2009 and 2010, as amended by Federal Law No. 122-FZ of July 22, 2008, sets forth the following annual federal budget indicators: fiscal revenues - 8,965,735.6 million roubles (21.2% of GDP), expenditures - 7,021,926.9 million roubles (16.6% of GDP), net surplus - 1,943,808.7 million roubles (4.6% of GDP).

Federal budget revenues for nine months of 2008 constituted 7,155,717 million roubles, or:

• 23.2% of the provisional GDP estimate for nine months of 2008 (30,855,800 million roubles);
• 79.8% of the provisional federal budget revenues for 2008 as approved by the Federal Law On the Federal Budget for 2008 and for the Planning Period 2009 and 2010, as amended by Federal Law No. 122-FZ of July 22, 2008.

Federal budget expenditures for nine months of 2008 constituted 4,594,168 million roubles, or:

• 14.9% of the provisional GDP estimate for nine months of 2008 (30,855,800 million roubles);
• 65.4% of the expenditures as approved by the Federal Law On The Federal Budget for 2008 and for the Planning Period 2009 and 2010, as amended by Federal Law No. 122-FZ of July 22, 2008;
• 60.6% of the consolidated federal budget spending report for 2008 as amended (hereinafter - the amended spending report).

Cash expenditures include expenses of 6,368.4 million roubles made out of incomes generated from lease of property assigned to public sector bodies (government organisations), which expenses are not planned but pursuant to Article 5, section 11, para. 1 of Federal Law No. 63-FZ of April 26, 2007, On Amending the Fiscal Code of the Russian Federation in terms of budgeting regulation and bringing certain legislative acts of the Russian Federation to conformity with the Russian budget legislation, these incomes represent an additional source of finance of the said organisations (hereinafter - the rent-roll).

Federal budget surplus for nine months of 2008 stood at 2,561,549 million roubles (8.3% of GDP).

Primary federal budget surplus for the reporting period constituted 2,692,489.9 million roubles (8.7% of GDP).

The balance of sources of the federal budget deficit financing for nine months of 2008 constituted (-) 2,561,549 million roubles, including:

• Internal sources of the federal budget deficit financing of (-) 2,459,944.5 million roubles;
• External sources of the federal budget deficit financing of (-) 101,604.5 million roubles.

Dynamics of the key federal budget implementation indicators for nine months of 2004-2008 (in % of annual figures)

Indicator	2004	2005	2006	2007	2008	A 5-year average
Revenues	88.4	110.7	90.4	73.0	79.8	88.5
Expenditures	69.1	82.7	67.1	63.4	65.4	69.6
interest	62.5	73.1	68.9	74.3	72.8	70.3
non-interest	69.9	83.5	67.0	63.1	65.2	69.7
Surplus	7 times	4.2 times	2.2 times	108.1	131.8	3.1 times
Primary surplus	2.1 times	2.6 times	1.9 times	104.9	126.3	1.8 times

Analysis of key federal budget implementation indicators over the last five years (for nine months of 2004-2008) showed that in terms of revenues this ratio in 2008 (23.2%) decreased by 0.7 percentage points as compared to 2005 (23.9%), at the same time staying 0.7 percentage points higher than the 5-year average (22.5 %).

In terms of expenditures, this ratio for nine months of 2004-2008 remains practically at the same level staying around 15.0%, save for a minor growth in 2005 (16.3 %), however, in 2008 the ratio was 0.3 percentage points lower than the 5-year average (15.2%).

Starting from 2005, the federal budget surplus to GDP percentage ratio was practically constantly growing and in 2008 was 1 percentage point higher than the 5-year average (7.3 %).

Federal budget revenues

The federal budget revenues for January-September 2008 constituted 7,155,717 million roubles (23.2% of GDP) or 79.8% of the adjusted provisional federal budget revenues for 2008 and were 319,300.7 million roubles, or 4.7% higher than the amount provided by chief administrators of the federal budget revenues in their January-September 2008 forecast.

Total federal budget revenues include tax receipts comprising 56.8% and non-tax revenues of 43.2%. The major part of these revenues was made up by receipts from four profit earners: customs duties, value-added tax, mineral extraction tax on and company profit tax.

Federal budget expenditures

Budget allocations under the Federal Law On the Federal Budget for 2008 and for the Planning Period 2009 and 2010 were approved in the amount of 6,570,297.7 million roubles.

The budget spending report and budget obligation limits for 2008 and for the planning period 2009 and 2010 were approved on November 30, 2007.

Based on the budget spending report indicators, on December 4, 2007, the chief administrator, administrators and beneficiaries of the federal budget funds were advised of the budget allocation amounts and budget obligation limits for 2008 and for the planning period 2009 and 2010.

In January-September 2008 the budget spending report was amended for a total amount of (+) 1,007,735.3 million roubles, including amendments to the budget expenditure classification divisions of the Russian Federation budget classification:

million roubles 

 

0100	Federal matters	(+) 224,488.2
0200	National  defence	(+) 74,479.2
0300	National security and law-enforcement activities	(+) 59,983.9
0400	National economy	(+) 101,101.5
0500	Housing and utilities	(+) 10,942.7
0600	Environmental protection	(+) 756.0
0700	Education	(+) 35,977.9
0800	Culture, cinematography and mass media	(+) 10,243.6
0900	Public health, physical fitness and sports	(+) 105,763.9
1000	Social policy	(+) 66,651.3
1100	Inter-budget transfers	(+) 317,347.1

In nine months of 2008 the budget spending report was amended on the following grounds set forth by Article 217 of the Russian Federation Fiscal Code and Article 29 of the Federal Law On the Federal Budget for 2008 and for the Planning Period 2009 and 2010:

1. Following enactment of Federal Law No. 19-FZ of March 2, 2008, On Amending the Federal Law On the Federal Budget for 2008 and for the Planning Period 2009 and 2010, the budgetary allocations were increased by 331,264.4 million roubles.
2. Following enactment of Federal Law No. 122-FZ of July 22, 2008, On Amending the Federal Law On the Federal Budget for 2008 and for the Planning Period 2009 and 2010, the budgetary allocations were increased by 159,137.2 million roubles.
3. On grounds under Article 29 of the Federal Law On the Federal Budget for 2008 and for the Planning Period 2009 and 2010:
• 3.1, part 1:
(+) 277,443.2 million roubles - balances of the federal budget funds as of January 1, 2008, on the Federal Treasury accounts as a result of underutilisation of 2007 budgetary allocations and assigned as an additional source of financing expenditures in 2008;
• 3.2, para. 1 of part 2:
(+) 236,740.2 million roubles - amendments made as a result of underutilisation of budgetary allocations made from the Investment Fund in 2007 as per articles 94 (para. 4) and 179. 2 of the Russian Federation Fiscal Code;
• 3.3. para 2 of part 4:
(+) 3,150.3 million roubles - increase of budgetary allocations out of funds generated from sale of released movable and immovable military and other property in day-to-day management of the federal executive bodies where a military and equated service is envisaged, from sale of military products available to the federal executive bodies as a result of military-technical cooperation, as well as from sale in due order of land lots allocated for defence and security purposes, provision of housing for military personnel and equated persons.

Adjusted budget spending report stood at 7,578,033 million roubles.

As of the end of the reporting period, budget obligation limits were as follows:

• Approved and advised to the chief administrators of the federal budget funds - 7,500,123.2 million roubles or 99.0% of the adjusted spending report;
• Allocated by chief administrators - 6,265,057.8 million roubles or 83.5% of the advised budget obligation limits, respectively.

Cash expenses for nine months of 2008 constituted 4,594,168 million roubles, or 60.6% of the adjusted spending report.

Decree of the President No. 724 of May 12, 2008, on the Issues related to the System and Structure of the Federal Executive Bodies, approves the new structure of the federal executive bodies. As a result:

• Six federal executive bodies were abolished;
• Nine federal executive bodies were transformed;
• 13 new federal executive bodies were established taking over the functions of the abolished (transformed) federal executive bodies;
• Two federal executive bodies were chosen to take over the functions of the abolished (transformed) federal executive bodies.

The Government signed on June 2, 2008, resolutions No. 793-r, No. 794-r, No. 795-r regulating reorganisation procedures in respect of the abolished and transformed federal executive bodies.

2. The effective use of funds from the Investment Fund of the Russian Federation

Pursuant to Article 179.2 of the Fiscal Code of the Russian Federation, the Investment Fund represents a portion of the federal budget funds used to implement investment projects on a public-private partnership basis.

The functions involving the provision of state support out of the Fund's resources are performed by the Ministry of Regional Development.

Government Resolution No. 134 of March 1, 2008, approves the rules for formation and use of budgetary allocations from the Investment Fund, setting forth goals, forms, and terms and conditions of providing state support out of the Fund's resources for the implementation of investment projects, integrated investment and concessional projects of federal, regional or interregional importance, implemented on a public-private partnership basis.

Project implementation can be initiated by sole proprietors (private entrepreneurs), business entities, and governmental and municipal authorities (bodies of local self-government).

Cost of a project of federal importance should be at least 5 billion roubles, with at least 25% of total project costs being covered by private funds.

Regional investment projects should be in line with the objectives of the social and economic development of a constituent entity of the Russian Federation on whose territory the project is implemented, while the cost of any such project should be no less than 500 million roubles. The share of private capital in project financing should be at least 50%, and the project funding structure should also include funds from the regional budget. The share of such co-financing is determined by the Ministry of Regional Development depending on the region's fiscal capacity.

Qualified investment projects are approved by Government executive orders.

As of November 1, 2008, as part of the Fund's activities, the Government has approved 21 projects of federal importance.

The list of investment projects entitled to state support out of the Fund's resources (allocations), as approved by Government Executive Order No. 1708 of November 30, 2006, includes 14 projects of federal importance:

• Construction of the Western High Speed Diameter highway in St Petersburg;
• Construction of the Orlovsky Tunnel under the Neva River in St Petersburg as part of Volga-Baltic waterway development;
• Construction of a new exit to the Moscow Ring Automobile Road (MKAD) from M-1 Belarus highway (Moscow - Minsk);
• Construction of Moscow - St Petersburg high speed highway on 15th - 58th km segment;
• Integrated development of Nizhnee Priangarye;
• Transport infrastructure development for exploration of mineral resource base in the south-east of the Chita Region;
• A complex of oil refining and processing plants in Nizhnekamsk;
• Kyzyl-Kuragino railroad construction along with development of mineral resource base in the Republic of Tyva;
• Construction and follow-up operation of Yug-2 (South-2) multi-type transhipping complex at Ust-Luga commercial seaport;
• Organisation of chip (integrated microchip) production on 300-mm-diameter wafers on 65-45 nanometre design rules;
• Industrial complex in Novomoskovsk of the Tula Region;
• Organising express passenger-train traffic en route St Petersburg - Helsinki;
• Reconstruction of the Oune-Vysokogornaya railway section with construction of a new Kuznetsovsky tunnel along the Komsomolsk-on-Amur - Sovetskaya Gavan section;
• A comprehensive programme of water supply/disposal facilities construction and reconstruction in Rostov-on-Don and the south-west of the Rostov Region.

In implementing the above projects, the following construction projects are contemplated:

• Highways (5 roads, 1 tunnel, 1 bridge crossing);
• Railway infrastructure facilities (4 railway tracks, 1 tunnel, 1 bridge crossing, 1 railway station);
• Power generation and power grid facilities (8 facilities);
• A complex of oil refining and processing plants, main oil lines and oil-product pipe lines;
• Port facilities (1 project);
• Water supply/disposal facilities (1 project);
• Industrial facilities (1 production).

Total cost of projects in corresponding year prices stands at 1,265.3 billion roubles (inclusive of VAT), including the Fund's allocations of 363.6 billion roubles.

The list of projects for which project documentation is being developed under the auspices of the Fund, as approved by Government Executive Order No. 1082-r of August 18, 2007, and includes seven projects of federal importance:

• Project documentation development for construction and operation on a paid basis of the M-4 Don highway (from Moscow through Voronezh, Rostov-on-Don and Krasnodar to Novorossiysk) on the 21st - 117th km and 330th -464th km sections;
• Project documentation development for construction and operation on a paid basis of Krasnodar - Abinsk - Kabardinka highway;
• Project documentation development for construction of Moscow - St Petersburg high speed highway on the 58th - 684th km section (with follow-up operation on a paid basis);
• Project documentation development for implementation of Ural Promyshlenny - Ural Polyarny (UPUP) investment project;
• Project documentation development for implementation of Complex Development of South Yakutia investment project;
• Project documentation development for implementation of investment project "Construction of the Central Ring Road (TsKAD) in the Moscow Region";
• Project documentation development for implementation of investment project "South Trans-Regional Hydrologic System".

Implementation of these projects contemplates engineering design of:

• Highways (6 roads);
• Railway infrastructure facilities (6 railway tracks);
• Power generation and power grid facilities (9 facilities);
• Mining-and-metallurgical works.

Total project documentation development costs in corresponding year prices constitutes 41.0 billion roubles (inclusive of VAT), including the Fund's allocations of 36.1 billion roubles.

In general, in implementing the projects of federal importance every rouble spent out of the Fund's allocations corresponds to approximately 2.5 roubles of investors' own or borrowed funds (construction of capital structures of state and investors' property under the projects for which project documentation is being developed, not included).

Starting from June 2008, the Ministry of Regional Development has been working on selecting the projects of regional and inter-regional importance.

As of November 1, 2008, 49 regional project support applications were submitted to the Ministry of Regional Development by 32 Russian Federation constituents.

Total cost of these projects is around 200 billion roubles, including the Investment Fund resources requested in the total amount of more than 27 billion roubles; the total amount of funds from the budgets of the Russian Federation regions exceeds 13 billion roubles.

For implementing these projects it is anticipated to attract approximately 5.6 roubles of investor's own and borrowed funds per one rouble of the Fund's allocations.

To secure expenditure obligations for investment projects' implementation, the Finance Ministry, in drafting the federal law on the federal budget for the next fiscal year and for the planning period, determines the actual allocations from the Fund based on the necessity to guarantee the financing of the approved investment projects.

Current expenditure obligations under investment projects approved by Government executive orders No. 1708-r and No. 1082-r, including investment adviser expenses, stand at 1,417.5 billion roubles.

At the same time the Investment Fund activities provide for implementation of the following projects currently listed on the Federal Targeted Programme for the Development of Russia's Transport Infrastructure (2010-2015), which will require an increase in 2009-2015 of the Fund's allocations by 670.1 billion roubles:

• Construction and follow-up operation on a paid basis of M-4 Don highway (from Moscow through Voronezh, Rostov-on-Don, Krasnodar to Novorossiysk) on the 21st-117th and 330th-464th km segments;
• Construction of Moscow-St-Petersburg highway on the 58th-684th km segment (with follow-up operation on a paid basis);
• Construction of the Central Ring Road in the Moscow Region;
• Ural Promyshlenny - Ural Polyarny (construction of railway tracks "Polunochnoye - Obskaya - Salekhard and Salekhard - Nadym).

The federal executive bodies concerned work through proposals to improve the Fund's formation and allocation procedure.

In particular, the following provisions are made:

1. Simplification of application submission and review procedures for extension of the Fund's allocations by introducing a ‘single window' system and reducing the number of documents to be submitted by a project initiator.
This mechanism, given a clear time and action scheduling for all project selection participants, will enhance the effectiveness of decision-making on applications received, considerably reducing the time needed to make a decision on provision of state support of projects though allocation of the Fund's resources, and dispensing a project initiator with the necessity to obtain project opinions from the federal executive bodies and an investment adviser by charging the Ministry of Regional Development with interagency project coordination.
2. Approval of a clear procedure of reviewing applications and making decisions on them by the investment commission in charge of selecting projects bidding for the Fund's allocations, and the governmental commission on investment projects of federal importance.
This mechanism aims at enhancing transparency and publicity of the project selection and improving the Fund's mobility, which is an important factor of public-private partnership development.
3. Entrust the Bank for Development and Foreign Trade (Vnesheconombank), a state corporation, with project analysis currently performed by non-government investment advisers.
Vnesheconombank's project evaluation in terms of financial, budget and economic efficiency will increase the responsibility for the quality of the works performed and reduce initiator and the federal budget expenses related to project appraisal.
4. Setting a project's correspondence to the Concept of Long-Term Social and Economic Development of the Russian Federation until 2020, industrial development strategies, social and economic development strategies of the Russian Federation regions, as a project selection criterion.
Proposed changes will allow selecting only priority projects that are in conformity with the industrial and territorial development plans, and this will boost the competitive edge of the Russian Federation territories and industries.
5. Combining design and construction phases of capital development in one project. This will allow avoiding the second round of project selection round related to construction under capital projects for which the project documentation has been developed out of the Fund's allocations.
Thus, a decision on allocation of the Fund's resources for design engineering purposes shall guarantee allocation of the funds for construction. At the same time the necessary project appraisal is performed once a positive state expert appraisal is obtained for project documentation opinion to attest the project's correspondence to efficiency criteria.
Since the development of project documentation and the construction are combined in a single project, a provision is made for extension of implementation deadlines up to 10 years for projects of federal importance.
6. The minimum cost for projects of federal importance is increased to up to 10 billion roubles, supporting the selection and financing of the significant projects only.
7. Clarification of the Fund's allocation provision forms. It is planned to identify the following forms of the Fund's allocation provision:
o Budget investments in capital development of the state property of the Russian Federation (including financing of project documentation development);
o Subsidisation of Russian regional budgets to co-finance capital development of state or municipal property of the Russian Federation regions (including financing of project documentation development);
o Budgetary allocations to charter capitals of open joint-stock companies, including participation in their establishment, to develop state and/or municipal infrastructure required to secure exercise of state and municipal powers as per applicable federal laws.
8. Inclusion in the rules of definitions of the key terms and notions used therein to avoid any ambiguity in interpreting and applying the rules.
9. Introduction of requirements to investment agreements governing the relationship between project implementation participants, including requirements to their mutual obligations, as well as requirements to agreements on subsidisation of budgets of the Russian Federation regions and municipal entities.

3. Amendments to Government Resolution No. 866 of December 7, 2001

The Ministry of Economic Development introduced to the Government in established procedure a draft Government Resolution On Amending Government Resolution No. 866 of December 7, 2001, as elaborated by the Ministry of Regional Development per the directives of the President of the Russian Federation No. pr-1348 of July 20, 2007, and Government No. MF-P11-3690 of July 26, 2007.

The draft Resolution contemplates a new version of the Federal Targeted Programme of the Kaliningrad Region Development until 2010 for the purposes of extending its implementation until 2014.

The draft provides for amendments to the programme to specify the list of measures, the volumes of their financing and implementation schedule, state clients and implementation mechanism.

Programme financing parameters were brought to conformity with the key parameters of the federal budget for 2009 and for the planning period 2010 and 2011, which contemplates allocation for these purposes of 5.3 billion roubles in 2009, 8.6 billion roubles in 2010 and 11.9 billion roubles in 2011.

Accordingly, it is planned to increase the federal budgetary allocations for the programme implementation against the limits approved by Federal Law No. 198-FZ of July 24, 2007, On the Federal Budget for 2008 and for the Planning Period 2009 and 2010, by 3.4 billion roubles in 2009 and by 6.1 billion roubles in 2010.

Total programme funding is proposed at 436.5 billion roubles, including the federal budget funds of 56.8 billion roubles (13% of implementation costs), funds from the consolidated budget of the Kaliningrad Region of 12.4 billion roubles (2.85%), and funds from non-budgetary sources of 367.3 billion roubles (84.15%).

The programme targets include development of transport, housing and utilities infrastructure, enhancement of education system resource base, modernisation of public health facilities, and energy security in the Kaliningrad Region. On top of that, the programme also contemplates measures to fulfil obligations undertaken by the Russian Federation as a party to the Convention on the Protection of the Marine Environment of the Baltic Sea Area (1992 Helsinki Convention).

A provision is made to amend the programme implementation mechanism contemplating financing the programme measures through the federal budget subsidies provided under the subsidy agreement (in accordance with Government Resolution No. 392 of May 16, 2008 On Forming, Provision and Allocation the Federal Budget Subsidies to the Budgets of the Russian Federation Regions).

4. Agreement on the Secretariat of the Customs Union Commission, to be submitted to the President of the Russian Federation for signing

The Agreement on the Secretariat of the Customs Union Commission has been elaborated to implement Resolution of the Inter-State Council of the Eurasian Economic Community (EurAsEC) No. 313 of August 16, 2006, on formation of the Customs Union of the EurAsEC member states and Plan of Action to form the Customs Union as part of the Eurasian Economic Community as approved by Resolution of the EurAsEC Inter-State Council No. 1 of October 6, 2007.

Provisions of the draft Agreement set forth the functions of the Secretariat as a working body of the Customs Union Commission, in accordance with which the Secretariat shall arrange for operation of the EurAsEC Inter-State Council, the supreme Customs Union body, of the commission, as well as arranges for information and technical support of their activities. Certain articles of the Draft Agreement set forth the organisational structure of the Secretariat, personnel recruitment procedures, identify specific features of their work as international employees, and regulate social aspects of personnel management.

5. Signing the Tariff Quota Agreement

The Agreement On Tariff Quotas is aimed at promoting a deeper economic integration and fair competition. It was elaborated to implement Resolution of the Inter-State Council of the Eurasian Economic Community (EurAsEC) No. 313 of August 16, 2006, on formation of the Customs Union of the EurAsEC member states and Plan of Action to form the Customs Union as part of the Eurasian Economic Community as approved by Resolution of the EurAsEC Inter-State Council No. 1 of October 6, 2007.

The provisions of the draft Agreement regulate terms and conditions of applying tariff quotas to third countries' imports to the common customs territory of the Customs Union member states of agricultural goods and other equated products, to boost their agricultural production, ensure the necessary consumption of agricultural products and contribute to international trade development. Allocation of quota shares to applicants will be based on their equality in terms of quota eligibility and non-discrimination according to the form of ownership, place of registration or market position, while distribution of tariff quota among the third countries will, as a rule, be made based on the consultations with all major suppliers operating in these countries, specifically those suppliers whose share in imports to the common customs territory is 10% or more.

6. Signing the Protocol on Application in Exceptional Cases of Import Customs Duty Rates Different from the Common Customs Tariff Rates

The protocol on application in exceptional cases of higher or lower import customs duties following introduction of the Single Customs Tariff was elaborated to implement Resolution of the Inter-State Council of the Eurasian Economic Community (EurAsEC) No. 313 of August 16, 2006, on formation of the Customs Union of the EurAsEC member states and Plan of Action to form the Customs Union as part of the Eurasian Economic Community as approved by Resolution of the EurAsEC Inter-State Council No. 1 of October 6, 2007, and clarification of the provisions of the Agreement on the single customs tariff regulation of January 25, 2008.

Provisions of the draft Protocol set forth the procedure on review by the Customs Union Commission of possibilities to apply by a Customs Union member state of a higher or lower rate of import customs duty as compared to the Single Customs Tariff rates in force applicable to a product originating from a third country, and also identify the cases when such a decision can be made.

Permission for a Customs Union member state to apply a lower rate may be given in a case of a heavy product deficit, if this is required to satisfy the socially vital needs of the population or production development needs provided the same cannot be satisfied through production in other Customs Union member states.

Application of a higher rate is discussed in cases when such measure is a pre-requisite for the development of an industry of a Customs Union member state.

7. Signing the Protocol on Tariff Preferences

The Protocol On Tariff Preferences was elaborated to implement Resolution of the Inter-State Council of the Eurasian Economic Community (EurAsEC) No. 313 of August 16, 2006, on formation of the Customs Union of the EurAsEC member states and Plan of Action to form the Customs Union as part of the Eurasian Economic Community as approved by Resolution of the EurAsEC Inter-State Council No. 1 of October 6, 2007.

The provisions of the draft Protocol set forth the procedure according to which tariff preferences (duty relief) for import to the common customs territory in cases not provided for in articles 5 and 6 of the Agreement on the Single Customs Tariff Regulation of January 25, 2008, are granted exclusively based on the Customs Union Commission decisions. The Commission conducts a comparative analysis of legislation of the Customs Union member states in terms of applying the above-mentioned tariff preferences.

8. Signing the Protocol on the Introduction in the Customs Union of a Single System of Tariff Preferences

The Protocol on the Single System of Tariff Preferences of the Customs Union aims at promoting deeper economic integration and fair competition. It was elaborated to implement Resolution of the Inter-State Council of the Eurasian Economic Community (EurAsEC) No. 313 of August 16, 2006, on formation of the Customs Union of the EurAsEC member states and Plan of Action to form the Customs Union as part of the Eurasian Economic Community as approved by Resolution of the EurAsEC Inter-State Council No. 1 of October 6, 2007, and specification of provisions of the Agreement on the Single Customs Tariff Regulation of January 25, 2008.

Provisions of the draft Protocol set forth the procedure of granting tariff preferences for import to the common customs territory of the Customs Union member states of goods originating or imported from the developing and least developed countries, the list of which was approved by the Customs Union Commission, and also determines a percentage of positions from the list of goods for the import of which a preference is granted, of the total number of positions in the Common Commodity Classification of Foreign Economic Activity.

9. Signing the Agreement Introducing a Customs Value Declaring Procedure for Goods Crossing the Customs Union Borders

The draft Agreement Introducing a Customs Value Declaring Procedure for Goods Crossing the Customs Union Borders was elaborated in accordance with the measures to implement the Plan of Action to form the Customs Union as part of the Eurasian Economic Community (EurAsEC) (2008-2010) to harmonise the legislation of the Customs Union member states in terms of declaring the goods customs value. This Agreement is meant for further use when elaborating respective provisions of the Customs Union Customs Code.

The draft sets forth basic principles of declaring the customs value of goods and includes definitions of such terms as "customs value declaring" and "declaration of the customs value".

The Agreement sets forth the status of customs value declaration as a document evidencing the facts with legal effect and a document forming a part of the customs declaration.

The draft provides for unification within the Customs Union of the customs value declaration forms and fill-in rules.

10. Signing the Agreement on Accuracy Control of Customs Value Determination for Goods Crossing the Customs Union Borders

The draft Agreement On Accuracy Control of Customs Value Determination for Goods Crossing the Customs Union Borders was elaborated in accordance with the measures to implement the Plan of Action to form the Customs Union as part of the Eurasian Economic Community (EurAsEC) (2008-2010) to harmonise the legislation of the Customs Union member states in terms of control over customs value of goods.

The draft sets forth the basic principles of accuracy control over determination of customs value of goods crossing the Customs Union borders. This Agreement is set to be further used when elaborating respective provisions of the Customs Union Customs Code.

The Agreement sets forth that the customs value control does not apply to goods moved across the Customs Union borders by individuals for personal or other needs or for purposes not related to any entrepreneurial activity, and such control is exercised by the customs authorities of the Parties both upon customs clearing of the goods and following their release.

The draft Agreement:

• Determines types of decisions made by a customs authority based on the control results, the grounds for decision-making by a customs authority as to the adjustment of the goods customs value, as well as the procedure of advising this decision to the person declaring the goods;
• Sets forth the grounds for additional review by a customs authority of customs value information provided by the customs applicant and identifies the right of the person declaring the goods to prove the validity of the customs value determination method used and the authenticity of the documents and information provided;
• Provides for a possibility to introduce unified customs value forms and adjustment procedures for all Customs Union member states.

The implementation of the Agreement will not entail any additional federal budget expenditures.

11. Signing the Loan Agreement Between the Russian Federation and the European Bank for Reconstruction and Development (EBRD) to Finance Reconstruction of Water Supply and Environmental Protection System in Kaliningrad (a centralised heat supply component)

The project to reconstruct the water supply and environmental protection system in the city of Kaliningrad contemplates a number of measures to reconstruct the city's heat supply system.

In the course of the project implementation it is planned to considerably enhance the efficiency of the city heat supply system operation, reduce the municipal budget expenditures related to maintenance and operation of its infrastructure, improve the quality of services rendered to the population at the same time bringing down their cost, and reduce discharge of harmful agents.

This project forms an important part of the Kaliningrad housing and utilities reform, and its implementation will help reduce heat energy generation and end-user supply costs by 130 million roubles or 15%, improve the quality of this service and introduce quantity calculation.

Since Poland and Lithuania, which border on the Kaliningrad Region, joined the European Union (EU), the project also contemplates adjustment of air pollution indices in accordance with the EU standards.

It is expected that the project will have a major environmental effect since disuse of coal and black oil in the heat energy generation will help reduce carbon dioxide, sulphur and nitric oxides discharge by 41,000 metric tons or 30% per year.

In addition to a 12 million euro loan extended by the European Bank for Reconstruction and Development, a 7.3 million euro grant from by the Assembly of the Northern Dimension Environmental Partnership is envisaged to finance the measures under the project estimated at 21.5 million euros. Besides, it is also planned that the project will be financed out of the funds of a 1.7 million euro grant extended by the Swedish International Development Cooperation Agency (SIDA) along with the funds from the Kaliningrad regional budget in the amount of 500,000 euros.

12. The draft Federal Law On Ratification of the Convention Between the Government of the Russian Federation and the Government of the Bolivarian Republic of Venezuela on Avoidance of Double Taxation and Prevention of Income and Capital Tax Evasion

The Federal Law provides for ratification of the Convention between the Government of the Russian Federation and the Government of the Bolivarian Republic of Venezuela on avoiding double taxation and preventing evasion of income and capital taxes, signed in Caracas on December 22, 2003.

The Convention aims at creating such legal framework when legal entities and individuals of each of the contracting states will not have to pay taxes from one and the same income and capital twice - in their respective state and in the partner-state.

Ratification of the above Convention will contribute to boosting mutually beneficial entrepreneurial and investment activity between legal entities and individuals of the Russian Federation and the Bolivarian Republic of Venezuela.

13. Declaring inoperative the acts of the Government of the Russian Federation following full discharge by the organising committees of their relevant tasks and functions

The draft Executive Order of the Government on declaring inoperative the acts of the Government was prepared as a follow-up to discharge by the organising committees of their respective tasks and functions.

The draft proposes to abolish ten organising committees:

1. Organising committee for preparation and hosting of the 2nd All-Russian contest "Russian Organisation of High Social Efficiency."
2. Organising committee for preparation and hosting of the 3rd All-Russian contest "Russian Organisation of High Social Efficiency."
3. Organising committee for preparing for and hosting of the All-Russian exposition and ensuring participation of the Russian Federation in the World EXPO-2005 Exhibition held March 25 until September 25, 2005 in Nagoya, Japan.
4. Organising committee for preparing for and hosting of the 10th International Congress of the Finno-Ugrian experts.
5. Organising committee for preparing for and hosting of events on the occasion of the 140th anniversary of voluntary resettlement of Koreans to Russia.
6. Organising committee for preparing for and hosting in Moscow of the 1st International Conference "Corporate Governance and Economic Growth in Russia."
7. Organising committee for preparing for and hosting in the Russian Federation of events to mark the 10th anniversary of the International Year of the Family.
8. Organising committee for preparing for and hosting of the 6th Conference of the International Competition Network (ICN).
9. Organising committee for preparing for and hosting of events to mark the 300th birthday anniversary of Leonhard Euler.
10. Organising committee for preparing for and hosting in 2008 of the 5th World Congress of Finno-Ugrian Peoples in Khanty-Mansiisk.

The same draft executive order proposes to declare inoperative 16 Government decisions pertaining to these organising committees.

November 26, 2008
Moscow

* 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.