The following issues are scheduled for discussion at the Government meeting on December 10, 2008:

1. The distribution of subsidies among the budgets of the regions of the Russian Federation in support of measures to ensure balanced budgets of the regions in 2008

The distribution of subsidies in the amount of 19,603,073,000 roubles has been approved by a decision of the (tripartite) working group on improving inter-budgetary relations in the Russian Federation on December 3, 2008.

Subsidies in the amount of 5,860,227,000 roubles have been distributed among the regions of the Russian Federation in whose budget revenues the share of socially significant expenditure in November-December 2008 is estimated at over 50% and whose actual budgets, as a result of implementation of consolidated budgets of the Russian regions over the first 10 months of 2008, were below the minimum level of budget support calculated when subsidies were distributed for the purpose of equalizing the budget resources of the regions for 2008.

Subsidies in the amount of 3,348,156,000 roubles are granted to the budgets of the Russian regions that have complied with the terms of the agreements on measures to ensure the payment of wages to employees in the public institutions of the Russian regions and municipalities, considering that the wage fund has been increased by 14% as of February 1, 2008, and to those that do not have sufficient assets in their budgets this year to pay wages to public sector employees.

The distribution of subsidies to the budgets of the Russian regions where heating oil is the main fuel in power facilities and the housing and utilities sector is intended to compensate for 50% of the extra spending of the consolidated budgets of the regions of the Russian Federation in connection with the unplanned growth of prices for heating fuel in 2008. The amount of the said subsidies is 2,462,509,000 roubles. Subsidies in the amount of 7,932,181,000 roubles have been distributed among the regions of the Russian Federation pursuant to the instructions of the President of the Russian Federation, the Government of the Russian Federation, and the decisions contained in the minutes of the Government meetings.

Pursuant to the minutes of the meeting No.3 of October 23, 2008 of the Organising Committee for the Celebration of the 400th Anniversary of Voluntary Accession of the Kalmyk People to the Russian State, 154,885,000 roubles have been allocated to the budget of Republic of Kalmykia, 60,000,000 roubles of which will finance the construction of the Palmov Regional Ethnography Museum.

In accordance with the Russian President's instructions No.Pr-623 of April 24, 2008, a subsidy in the amount of 356,688,000 roubles is envisaged for the budget of Republic of Mordovia to compensate for the reduction of the taxable base in connection with the termination of the activities of oil companies in the republic.

Pursuant to the instructions of the Government of the Russian Federation No.VP-P16-6237 of October 15, 2008 and No.KA-P16-6420 of October 22, 2008, the budget of the Chechen Republic is to be allocated 752 250 000 roubles out of the federal budget to develop project documentation for measures under the Federal Targeted Programme for the Social and Economic Development of the Chechen Republic in 2008-2011.

Pursuant to the minutes of the meeting at the office of Deputy Prime Minister of the Russian Federation Igor Sechin No. IS-P9-42pr of October 15, 2008, the budget of the Samara Region is to be subsidized 186,290,000 roubles. The support is being rendered because the social facilities owned by OAO AvtoVAZ have been put on the municipal balance sheet of the city of Togliatti.

Pursuant to the instructions of the President of the Russian Federation No.Pr-215 of February 8, 2007 and of the Government of the Russian Federation No.SN-P44-1368 of March 6, 2008, the budget of the Tomsk Region is to be subsidized 94,000,000 roubles to finance the capital repair of the building of the Tomsk Regional Youth Theatre.

Pursuant to the provisions of the Decree of the President of the Russian Federation No.260 of March 1, 2007 On Measures of Social and Economic Development of the Chita Region and the Aginsk-Buryat Autonomous Area and the Federal Constitutional Law No. 5-FKZ of July 21, 2007 On the Formation Within the Russian Federation of a New Constituent Entity of the Russian Federation as a Result of the Merger of the Chita Region and the Aginsk Buryat Autonomous Area, financial assistance in the amount of 323,540,000 roubles is to be granted to the budget of the Aginsk-Buryat Autonomous Area.

Pursuant to the submissions of the CEOs of the regions of the Russian Federation and the results of the monitoring of the implementation of consolidated budgets of the regions of the Russian Federation over the first 10 months of 2008, subsidies are to be made available to the budget of the Republic of Ingushetia in the amount of 346,908,000 roubles, 246,300,000 roubles of which will go toward financing the organization of local government on the territory of the Republic; 467,087,000 roubles to the Republic of North Ossetia-Alania, 244 700 000 roubles of which will go toward co-financing restoration of sections of regional roads damaged by the passage of military vehicles; to the budgets of the Republics of Adygea, Daghestan, Mari-El, Karachayevo-Circassian and Udmurtian Republics, the Krasnodar Territory, the Astrakhan, Irkutsk, Kaluga, Kemerovo, Kostroma, Magadan, Omsk, Orel, Penza, Rostov, Smolensk, and Tver regions, and the Chukotka Autonomous Area to ensure balanced budgets of the Russian Federation's constituent entities; to the budget of the Lipetsk Region to redeem the debt for petroleum products borrowed from the state material reserve for agricultural producers.

The instructions of the Government of the Russian Federation on the above issue shall be carried out within the limits of the reserve assets in the shape of subsidies in support of measures to ensure balanced budgets of the regions of the Russian Federation envisaged under Federal Law No. 198-FZ of July 24, 2007 On the Federal Budget for 2008 and the Planning Period of 2009 and 2010.

No additional disbursements will need to be made from the Federal Budget.

2. The Distribution of Subsidies to Reform Regional and Municipal Finances in 2008

Federal Law No. 198-FZ of July 24, 2007 On the Federal Budget for 2008 and the Planning Period of 2009 and 2010 envisages subsidies to reform regional and municipal finances in 2008 in the amount of 2,398,191,000 roubles, including 577,800,000 roubles for subsidies to local budgets.

In 2006 and 2007, two selections of the regions of the Russian Federation and two selections of municipal entities had been carried out for receiving subsidies. As a result, 20 regions of the Russian Federation and 18 municipal entities have been selected: the Republics of Daghestan, Tatarstan, Udmurtia, Chuvashia; Astrakhan, Volgograd, Vologda, Voronezh, Ivanovo, Kaliningrad, Lipetsk, Murmansk, Nizhny Novgorod, Omsk, Pskov, Sakhalin, Tver, Tomsk, Tula, and Ulyanovsk regions; the cities of Vladikavkaz, Volzhsky, Dzerzhinsk, Izhevsk, Yoshkar-Ola, Kazan, Naberezhnye Chelny, Nalchik, Omsk, Orsk, Penza, Ryazan, Saransk, Syktyvkar, Tyumen, Khabarovsk, Cheboksary, and Chita.

In accordance with the Rules on Granting Subsidies for the Reform of Regional and Municipal Finances, subsidies are conditional on the fulfillment of stages of the programmes of reforming regional and municipal finances.

The Republic of Daghestan has not fully implemented the first phase of the regional finance reform programme, and thus the subsidies earmarked for the Republic of Daghestan to reform regional finances are being redistributed among the regions of the Russian Federation that have fulfilled the first phase of the reform programmes comprehensively.

The cities of Vladikavkaz and Cheboksary have failed to fulfill the corresponding stages of the municipal finance reform programmes. At the end of 2007, the city of Kazan had exceeded the limit on deficit established under the Budget Code of the Russian Federation. As a result, the amount allocated to those cities is to be distributed among the municipal entities that have implemented the reform programmes.

The Government's executive order will be implemented within the limits of the allocations under the Federal Law On the Federal Budget for 2008 and the Period of 2009 and 2010.

3. The amounts of the issue of government securities in 2009

Pursuant to Federal Law No. 204-FZ of November 24, 2008 On the Federal Budget for 2009 and the Planning Period of 2010 and 2011, the Finance Ministry of the Russian Federation is submitting a draft executive order of the Government of the Russian Federation on the amount of the issue of government securities in 2009.

Federal Law No.204-FZ on the Federal Budget for 2009 and the Planned Period of 2010 and 2011 of November 24, 2008 determines the Programme of State Internal Borrowing of the Russian Federation for 2009 and the Planning Period of 2010 and 2011, which envisages borrowing through the issue of government securities in 2009 in the total amount of 429.102 billion roubles. Considering the state of the government securities market in 2008, the Finance Ministry, in order to fulfill the above programme of state internal borrowing of the Russian Federation for 2009 and the Planning Period of 2010 and 2011, proposes issuing 535.8 billion roubles worth of government bonds in 2009, of which:
• federal loan bonds - up to 410.0 billion roubles;
• government savings bonds - up to 125.8 billion roubles.

To minimize the risks connected with the structure of the government debt, the Finance Ministry plans that internal borrowing in 2009 will be mainly medium- and long-term.
In 2009, the Finance Ministry is planning to issue 410.0 billion roubles worth of federal loan bonds (OFZ) and 125.8 billion roubles worth of government savings bonds (GSO). Thus, medium- and long-term borrowing in 2009 will account for about 98% of the planned amount of internal borrowing.

To increase the liquidity of the government securities market, the Finance Ministry will continue to issue government bonds with standard maturity terms (3,5,10 and 15 years) in 2009.

Throughout 2009, the circulation of 3- and 5-year federal bonds will be brought to 45-50 billion roubles for each issue.

In addition, to further optimize the payment schedule for the service and redemption of the government internal debt, the Finance Ministry is planning new issues of federal bonds in 2009 with terms of up to 10 and 15 years.

The amount of 10- and 15-year issues is to be brought to 110-130 billion roubles each.

To rule out a negative impact on the liquidity of the government securities market by investment of large amounts of pension savings only in government securities circulating in the GKO-OFZ market, the Finance Ministry is planning to continue the issue of government savings bonds (GSOs) in 2009.

Thus, in accordance with the Programme of Internal Government Borrowing of the Russian Federation in 2009 and the Planning Period of 2010 and 2011 the Finance Ministry is planning to simultaneously develop two segments of the government securities market: the GKO-OFZ market and the GSO market, ensuring the investment of part of pension savings into government savings bonds.

4. Progress in fulfilling the instructions of the Government of the Russian Federation in the field of automobile industry development

The main decisions of the Government of the Russian Federation pertaining to the development of the automobile industry are set forth in the minutes of the meeting chaired by Prime Minister Vladimir Putin in the city of Yelabuga on May 27, 2008, and the minutes of the meeting chaired by Deputy Prime Minister of the Russian Federation Igor Sechin in the city of Togliatti on October 15, 2008.

The following measures should be singled out:

The stimulation of the renewal of the automobile fleet of the Russian Federation, including the development of credit and leasing mechanisms in the industry.

The main measures aimed at renewing the automobile fleet are:

• differentiated rates of the transport tax depending on the age of vehicles;
• development of a regulatory and legal framework for the disposal of vehicles;
• development and adoption of measures to promote the leasing of commercial vehicles in the automobile industry;
• limits on the service life of certain types of vehicles.

Up to 2.5 billion roubles are to be made available to transport machine-building and automobile industries in 2009.

On introducing additions to Article 154, part 2 of the Tax Code of the Russian Federation Regarding the Collection of the Value-Added Tax Paid When Selling Used Vehicles

The Draft Federal Law On Introducing Additions to Article 154, part 2 of the Tax Code of the Russian Federation passed the first and second readings at the State Duma of the Federal Assembly of the Russian Federation and was approved by the Federation Council of the Federal Assembly of the Russian Federation on November 27, 2008.

On cutting the rate of the transport tax on vehicles depending on their ecological class

The Draft Federal Law On Introducing Amendments to Chapter 28, Part 2 of the Tax Code of the Russian Federation introduces downward coefficients for transport tax rate on ecological class IV and V vehicles.

On cutting the rate of compulsory insurance tariffs paid by the owners of new vehicles equipped with modern safety systems.

Proposals have been made on introducing amendments to insurance tariffs paid under the scheme of compulsory insurance of the civil liability of the owners of vehicles, their structure and their application by insurers in determining the insurance premium approved by Government Decree No. 739 of December 8, 2005.

On broadening the thematic range of research and development in the automotive industry, including the creation of dual-purpose automobiles and the amount of financing thereof, including through the mechanism of public-private partnership.

In order to coordinate R&D in the automotive industry, the Ministry of Industry and Trade has formed a Scientific-Technical Council for the implementation of measures in the automotive industry and in the agricultural machine production.

The Scientific and Technical Council will prepare proposals on R&D.

On improving regulatory and legal framework pertaining to certification and assessment of compliance of vehicles with design and ecological safety requirements, as well as certification of test laboratories (centres).

The Draft Federal Law On Introducing Amendments to the Federal Law on Technical Regulation, prepared and submitted to the Government of the Russian Federation, envisages among other things the introduction of a mechanism of authorization of certification agencies in the sphere of compulsory confirmation of compliance.

On forming the mechanisms of support of the export of Russian-made automobiles as well as the sale market for trucks and buses, including measures to develop leasing, partly to meet state and social needs.

Measures aimed at the following are to be implemented:

• improving the budget process to enable leasing operations in the process of government procurement;
• introducing amendments to the legal legislation acts that allow OAO Rosagrolizing to implement projects for the leasing of Russian-made machinery, equipment and transport for Russian consumers.

Proposals have been considered on forming mechanisms of support for the export of Russian-made automobiles, specifically:

• on continued improvement of the mechanism of guaranteed support of the export of industrial products;
• on increasing budgetary allocations to compensate Russian exporters for part of the cost of paying interest on loans;
• on extending the practice of granting government loans under intergovernmental agreements to foreign states - consumers of advanced types of machines and technical products.

On the prospects of providing automobile producers with zinc-plated flat sheets.

Russian Government Decree No.813 of November 7, 2008 On the Temporary Rate of Import Customs Duty on Waste Scrap Ferrous Metals and Certain Types of Rolled Stock introduces a zero rate of import customs duty on zinc-plated hot-rolled flat sheets used in industrial assembly of automobiles.

On optimizing the rate of import customs duties on new and used cars, trucks and buses.

As an urgent measure to develop the automobile industry, proposals have been made on amendments to the Customs Tariff of the Russian Federation levied on motor vehicles.

A draft decree of the Government of the Russian Federation On Introducing Amendments to the Customs Tariff of the Russian Federation on Certain Types of Motor Vehicles has been submitted to the Government of the Russian Federation.

On the list of goods that can be subject to the customs regime of reprocessing for internal consumption to create conditions for the production of automobile parts on the territory of the Russian Federation.

Proposals have been introduced regarding the list of goods to which the customs regime of processing for internal consumption may be applied in order to create conditions for the production of automobile parts.

Proposals to the effect have been submitted to the Government of the Russian Federation.

On adjusting the rates of import customs duties on the bodies of automobiles and used specialized automobiles to ensure their targeted use.

Russian Government Decree No. 745 of October 10, 2008 introduces an import customs duty rate of 15%, but no less than 5000 euros, on the bodies of automobiles under position 8703 TN VED (the list of foreign trade items) of Russia.

On urgent measures to develop the automobile industry.

As part of the development of a comprehensive programme to renew the automobile fleet, the following measures are proposed:

• Differentiation of the transport tax by age of vehicle.
• Development of a regulatory and legal framework for the disposal of vehicles, including technical rules.
• Differentiation of the compulsory insurance of the civil liability of the owners of vehicles depending on the class and age of vehicle.
• Development of the leasing of commercial vehicles in the automobile industry;.

On preventing the import of vehicles that do not meet the technical and ecological requirements

A group has been formed comprised of representatives from the Interior Ministry, the Federal Customs Service, Rostekhregulirovaniye, the Prosecutor General's Office of Russia, and other organizations concerned with preventing the import of transport means that do not meet the legal technical and ecological requirements.

5. The Draft Federal Law On Introducing Amendments to the Federal Law On Additional Measures of Government Support for Families with Children

The Draft Federal Law On Introducing Amendments to the Federal Law On Additional Measures of Government Support for Families with Children has been developed for the purpose of giving financial support to families with children who signed a loan contract to acquire (build) housing before December 31, 2008.

Federal Law No. 256-FZ of December 29, 2006 On Additional Measures of Government Support for Families with Children envisages that part of the mother's (family) capital can be used to improve housing conditions.

Under Federal Law No. 256-FZ of December 29, 2006 the amounts referred to may not be used until three years after the birth (adoption) of the second, third, or subsequent children. Considering the time of the introduction of said federal law (as of January 1, 2007), the amounts referred to may not be used before January 1, 2010.

Considering the growth of loan interest rates, particular importance is attached to the material support of families with children who need to improve their housing conditions and have decided, without waiting for the time when they can use mother's (family) capital for these purposes, to acquire (build) housing by taking out a loan from a lending organization under a loan contract.

Under the draft federal law, the families who have concluded corresponding contracts prior to December 31, 2008 can dispose of the whole or part of the mother's (family) capital regardless of how much time has passed since the birth (adoption) of the second, third, or subsequent children by using the above assets to pay the principal and interest on loans, including mortgage loans.

Considering the effective date of the draft federal law, January 1, 2009, the proposed amendments to Federal Law No. 256-FZ of December 29, 2006 would make it possible to use all or part of the mother's (family) capital as early as 2009.

Considering the need to enable citizens to use all or part of the mother's (family) capital to repay all or part of the loans taken out to acquire or build housing as soon as possible, the draft federal law proposes reducing the time of the transfer of all or part of mother's (family) capital for said purpose to no more than two months after the date the territorial body of the Pension Fund of the Russian Federation passes a ruling on the application to use of mother's capital. That in turn requires an adjustment of the mechanism of the transfer of the mother's (family) capital from the federal budget to the budget of the Pension Fund of the Russian Federation, as reflected in the proposed amendments to Article 9 of Federal Law No. 256-FZ of December 29, 2006.

The issues connected with the transfer of mother's (family) capital from the federal budget of the Pension Fund of the Russian Federation will be spelled out in the process of subsequent adjustment of Government Decree No. 457 of July 20, 2007 On Approving the Rules of the Transfer of Mother's (Family) Capital from the Federal Budget to the Budget of the Pension Fund of the Russian Federation.

6. The Draft Federal laws On Introducing Amendments to the Budget Code of the Russian Federation and the Federal Law On Introducing Amendments to the Budget Code of the Russian Federation in regards to the Regulation of the Budgetary Process and the Harmonization of Some Legislative Acts of the Russian Federation with the Budgetary Legislation of the Russian Federation and On Introducing Amendments to Article 284, Part 2 of the Tax Code of the Russian Federation and Article 2 of the Federal Law On Introducing Amendments to Part 1 and Part 2 of the Tax Code of the Russian Federation and Some Legislative Acts of the Russian Federation.

On the Draft Federal Law On Introducing Amendments to the Budget Code of the Russian Federation and the Federal Law On Introducing Amendments to the Budget Code of the Russian Federation in regards to the Regulation of the Budgetary Process and the Harmonization of Some Legislative Acts of the Russian Federation with the Budgetary Legislation of the Russian Federation

The Draft Federal Law On Introducing Amendments to the Budget Code of the Russian Federation and the Federal Law On Introducing Amendments to the Budget Code of the Russian Federation in regards to the Regulation of the Budgetary Process and the Harmonization of Some Legislative Acts of the Russian Federation with the Budgetary Legislation of the Russian Federation is aimed at timely implementation of measures to support the financial market and sectors of the Russian economy and at eliminating legal uncertainty in applying certain provisions of the Budget Code of the Russian Federation.

Article 1 of the Draft Law envisages the introduction of the following amendments to the Budget Code of the Russian Federation:

1. Clarification of the principle of authorization to incur budgetary spending

The powers of the agency that disposes of budgetary assets with regard to the subordinate budgetary institution have been set forth under Article 158 of the Budget Code of the Russian Federation.

The principle of determining the subordination of a budgetary institution as a recipient of the budget assets to the main administrator (administrator) of budgetary assets is established under Article 381 of the Budget Code of the Russian Federation.

It must be noted that the current language of Part 4 of this article may lead to a conflict whereby the subordination of the budget institution (recipient of budgetary means) may differ from its subordination to the founder of the institution.

To preclude such a conflict, the language of Part 4 of Article 381 of the Budget Code of the Russian Federation is to be amended in such a way that the subordination of the recipient of budgetary assets (budget institution) to the main administrator (administrator) of budgetary assets arises only under the law or regulatory legal act of the President of the Russian Federation, the Government of the Russian Federation, the supreme executive power body of the constituent entity of the Russian Federation, and the local administration.

As for federal budget institutions, the issue of their subordination is to be resolved through amendments introduced in Decree No. 71 of the Government of the Russian Federation of February 10, 2004 On the Creation, Reorganization, and Liquidation of Federal State Institutions.

2. Compensation for shortfalls in revenues of the budgets of the constituent entities of the Russian Federation due to amendments to the tax legislation.

Federal Law No. 224-FZ of November 26, 2008 On Introducing Amendments to Part 1, Part 2 of the Tax Code of the Russian Federation and some legislative acts of the Russian Federation change tax legislation in order to ease the fiscal load on the real economy.

The law referred to above cuts the rate of tax on the profits of organizations subject to be transferred to the federal budget from 6.5% to 2.5% starting in 2009. The payer of the tax on the profit of organizations may include capital investment in the amount of up to 30% (depending on the amortization category) of the cost of basic assets in costs incurred in the reporting period. The maximum size of the property deductions from the tax on the incomes of natural persons represented in the sum spent by the tax payer on new construction or acquisition of housing on the territory of the Russian Federation has been increased from 1 million roubles to 2 million roubles.

In connection with this, an additional sum of approximately 550 billion roubles will be made available to enterprises in 2009. At the same time, the shortfalls in revenues of consolidated budgets of the constituent entities of the Russian Federation in regards to the tax on the profit of organizations (the increase of the maximum amortization bonus) will amount to an estimated 44.5 billion roubles, and for tax on the incomes of natural persons (increase of the property deduction), to 39.3 billion roubles.

In line with the principle of independence of budgets and to enhance the financial autonomy of regions and ensure their budget balances the draft law proposes amendments to the Budget Code of the Russian Federation.

The proposed amendments to the Budget Code of the Russian Federation would increase the share of excise on automobile fuel, straight-run gasoline, diesel fuel, and engine oils for diesel and carburetor (injector) engines transferred to the budgets of the constituent entities of the Russian Federation from 60% to 100%. The additional revenues of the constituent entities' budgets would amount to about 59.4 billion roubles in 2009.

3. Adjustment of the procedure of granting subsidies to legal entities out of the federal budget (budget of a constituent entitiy of the Russian Federation) by decisions respectively of the Government of the Russian Federation and the supreme executive power bodies of the constituent entities of the Russian Federation in implementing measures to support the financial market and sectors of the Russian economy in cases stipulated under federal laws or the laws of the constituent entities of the Russian Federation.

Pursuant to part 6, Article 25 of the Federal Law On the Federal Budget in 2009 and the Planning Period of 2010 and 2011, the Government of the Russian Federation has the right to allocate up to 175 billion roubles of federal money in 2009 to implement measures to support the financial market in the Russian Federation.

At the same time, under Clause 2, Article 78 of the Budget Code of the Russian Federation the cases and procedure of granting subsidies to legal entities out of the federal budget (out of the budget of a constituent entity of the Russian Federation) must be approved by the federal law on the federal budget (the law of the constituent entity of the Russian Federation on the budget of the constituent entity of the Russian Federation).

In connection with this, the discrepancy between the above rules should be eliminated by establishing the rule that would make it possible to suspend individual provisions of Clause 2, Article 78 of the Budget Code of the Russian Federation prior to January 1, 2010 in the cases stipulated by federal laws and the laws of the constituent entities of the Russian Federation to implement measures to support the financial market and sectors of the Russian economy by decisions of the corresponding supreme executive power bodies.

4. Sealing the provision on the procedure of granting subsidies out of the budgets of the constituent entities of the Russian Federation (local budgets) to other non-profit organizations that are not autonomous and are not public budget-supported.

Article 78 of the Budget Code of the Russian Federation contains general provisions that allow subsidies to be granted to legal entities (with the exception of subsidies to government (municipal) institutions), individual entrepreneurs, and individuals who produce goods and services out of the federal budget, the budgets of the constituent entities of the Russian Federation, and local budgets.

Since under the Civil Code of the Russian Federation non-profit organizations are legal entities, subsidies may be granted to non-profit organizations out of the budgetary system of the Russian Federation in accordance with Article 78 of the Budget Code of the Russian Federation.

That article determines, among other things, that the federal law on the federal budget may envisage subsidies to other non-profit organizations that are not autonomous or public budget-supported, including in the shape of contributing property to state-owned corporations.

This, however, does not preclude the granting of subsidies out of the budgets of the constituent entities of the Russian Federation (local budgets) to the relevant organizations pursuant to the provisions of Article 78 of the Budget Code of the Russian Federation.

The proposed additions to Clause 2, Article 781 of the Budget Code of the Russian Federation on granting subsidies to other non-profit organizations out of the budgets of the constituent entities of the Russian Federation and local budgets would fill the legal vacuum in the application of Articles 78 and 781 of the Budget Code of the Russian Federation.

5. Adjustment of the procedure for making decisions on budget investments

Under Clause 2, Article 79 of the Budget Code of the Russian Federation, the main administrator of the federal budget money has the right to make decisions on the preparation and disbursement of budget investments in capital construction projects owned by the Russian state to an estimated cost of at least 600 million roubles under the procedure laid down by the Government of the Russian Federation.

Decisions on the preparation and disbursement of budget investments in capital construction projects whose estimated cost exceeds 600 million roubles are made by the Government of the Russian Federation. The preparation of a normative legal act of the Government of the Russian Federation takes more time than the preparation of a normative act of a federal executive power body.

Reduction of the time period of the preparation of said decision will contribute to more effective use of federal budget assets.

In connection with this, the estimated cost of capital construction projects owned by the Russian Federation for which the decision on preparing and disbursing budget investments may be made by the main administrator of the federal budget is to be increased from 600 million roubles to 1.5 billion roubles.

6. Clarification of the procedure for granting budgetary investments in unitary public enterprises

In accordance with Clause 5, Article 12 of the Federal Law On State and Municipal Unitary Enterprises, the property of a unitary enterprise is in its economic management or operational management. In a unitary enterprise under operational management no authorized capital is formed.

The provision of Clause 5, Article 79 of the Budget Code of the Russian Federation applies both to state (municipal) enterprises and unitary enterprises for operational management of public property.

In connection with this, an amendment has been proposed to Clause 5, Article 79 of the Budget Code of the Russian Federation that takes into account the specific nature of the unitary enterprises and eliminates legal uncertainty.

7. Adjustment of the procedure for granting subsidies to the budgets of the constituent entities of the Russian Federation for co-financing investment in capital construction projects owned by the constituent entities of the Russian Federation.

The current edition of Article 79 of the Budget Code of the Russian Federation regulates the granting of subsidies to the budgets of the constituent entities of the Russian Federation for co-financing state-owned capital construction projects of the constituent entities of the Russian Federation that are financed from the budgets of the constituent entities of the Russian Federation, or for granting corresponding subsidies from the budgets of the constituent entities of the Russian Federation for co-financing capital construction projects owned by municipalities and financed out of the local budgets for capital construction projects included in the relevant long-term targeted programmes.

At the same time, the President of the Russian Federation and the Government of the Russian Federation may reconsider the need to co-finance capital construction projects owned by the constituent entities of the Russian Federation and municipalities.

In some cases the projects on which decisions have been made cannot be included in the long-term targeted programme.

In addition, not all the capital construction projects owned by the constituent entities of the Russian Federation and municipalities are included in the long-term targeted programmes of the constituent entities of the Russian Federation and municipal entities.

It is therefore proposed to add to paragraph 4, clause 7, Article 79 of the Budget Code of the Russian Federation a provision that makes it possible for said subsidies to be granted for capital construction projects not included in the long-term targeted programmes through the issue of regulatory legal acts of the Government of the Russian Federation.

8. Introduction of the provision allowing trust management of the assets of the Sovereign Wealth Fund.

The introduction of amendments to Article 9611 of the Budget Code of the Russian Federation would not only delegate certain powers to manage the Sovereign Wealth Fund to specialized financial agencies, but designate said organizations (including the state corporation Development and Foreign Economic Activities Bank (Vneshekonombank) as trust managers. The laws of the Russian Federation already contain provisions that regulate the procedure of trust management (for example, Chapter 53 of the Civil Code of the Russian Federation). Trust management will make the management of the Sovereign Wealth Fund more effective.

9. Adjustment of the procedure for accounting transactions with oil and gas revenues of the federal budget.

The size of the oil and gas transfer determined under the Law on the Federal Budget for 2008 and the Planning Period of 2009 and 2010 was achieved in August 2008 and the corresponding normative size of the Reserve Fund in August 2008. Since August 2008, oil revenues have been used to replenish the Sovereign Wealth Fund. The oil and gas revenues of the federal budget transferred in December 2008 are to be entered in the Sovereign Wealth Fund in January 2009 in accordance with Clause 2, Article 96 of the Budget Code of the Russian Federation.

In view of the falling oil prices, the size of oil and gas transfers into the budget in 2009 may turn out to be less than the target set under Federal Law No. 204-FZ of November 24, 2008 On the Federal Budget for 2009 and the Planning Period of 2010 and 2011. In 2009, oil and gas revenues will not be entered in the Reserve Fund and the Sovereign Wealth Fund, with only the oil and gas revenues for the first 11 months of 2009 to be included in the oil and gas transfer. The oil and gas revenues for December 2009 will be entered in the Reserve Fund in the event that the oil and gas transfer falls short of the target approved by the Federal Law on the Federal Budget for 2009 and the Planning Period of 2010 and 2011.

To ensure that the oil and gas transfer target approved under the Federal Law on the Federal Budget for 2009 and the Planning Period of 2010 and 2011 is not met in 2009 and the following years, and in order that oil and gas revenues are entered in the oil and gas transfer and consequently used to meet the expenditure commitments of the Russian Federation, a proposal has been tabled to change the language of Clause 2, Article 9612 of the Budget Code of the Russian Federation.

In light of the above, all the oil and gas revenues will go into the oil and gas transfer until the target set under the Federal Law On the Federal Budget for 2009 and the Planning Period of 2010 and - 2011 is met, and only then will it be entered in the Reserve Fund.

10. Adjustment of the procedure for granting state guarantees of the Russian Federation.

Under the Budget Code of the Russian Federation, the right to make decisions on issuing state guarantees of the Russian Federation lies with the Government of the Russian Federation. In cases stipulated under the federal law on the federal budget for the relevant fiscal year and the planning period, the Government of the Russian Federation may authorize the Finance Ministry to make decisions on issuing state guarantees of the Russian Federation in foreign currency in amounts not exceeding the equivalent of $50 million for each state guarantee of the Russian Federation.

The proposed amendments to Article 116 of the Budget Code of the Russian Federation concern the maximum sum of state guarantees of the Russian Federation that may be decided on by the Finance Ministry in cases stipulated under the federal law on the federal budget for the corresponding year and the planning period and the follow-up enactments of the Government of the Russian Federation.

At present, the Budget Code of the Russian Federation fixes the size for state guarantees of the Russian Federation only in foreign currency (not more than $50 million for each state guarantee of the Russian Federation), and there is no analogous norm for state guarantees of the Russian Federation in roubles.

For the purpose of timely and more effective state support of the enterprises in the real economy in the current economic situation, and to drastically reduce the time required for making decisions to issue state guarantees of the Russian Federation, it is necessary to introduce in the Budget Code a provision whereby the maximum size (sum) of state guarantees of the Russian Federation, which may be decided on by the Ministry of Finance, will be determined directly by the federal law on the federal budget for the corresponding year and the planning period. This change would add flexibility to the decision-making process on determining the size of state guarantees of the Russian Federation depending on the economic situation and the needs of the market.

11. Introduction of the provision on subsidiary liability of the main administrator of budgetary assets under the financial obligations of the recipients of budget money under its jurisdiction.

One of the main budgetary powers of the main administrator of budgetary assets is subsidiary liability under the financial obligations of the budgetary institution under its jurisdiction. This fact is to be reflected in Clause 1, Article 158 of the Budget Code of the Russian Federation, which establishes the budgetary powers of the main administrator of budgetary assets.

Including said obligation of the main administrator of budgetary assets in Clause 1, Article 158 of the Budget Code of the Russian Federation will eliminate the possibility of conflicting interpretations, in court practice, of the norms and provisions of civil and budget legislation of the Russian Federation pertaining to the subsidiary liability of public legal entities under the financial obligations of the budget institutions they have created.

12. Clarification of the procedure for the use of the balance of other inter-budget transfers in the ensuing fiscal year.

To ensure a uniform procedure of the use of budgetary assets granted in the form of targeted subsidies, subventions, and other inter-budget transfers the right is to be granted to use other inter-budget transfers not used in the current fiscal year in the ensuing fiscal year for the same purposes. The proposed amendments will preserve the targeted use of said inter-budget transfers in the ensuing fiscal year.

Article 2 of the Draft Law would introduce amendments to the Federal Law On the Introduction of Amendments to the Budget Code of the Russian Federation in regards to the Regulation of the Budget Process and Harmonisation of Selected Legislative Acts of the Russian Federation with the Budget Legislation of the Russian Federation that set down the requirement to include the budget allocations for budget investments in capital construction projects with various estimated costs (Clause 3, Article 79 of the Budget Code of the Russian Federation) in the federal law on the federal budget.

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On introducing amendments to Article 284, part 2 of the Tax Code of the Russian Federation and Article 2 of the Federal Law on Introducing Amendments to Part 1, Part 2 of the Tax Code of the Russian Federation and Selected Legislative Acts of the Russian Federation

The proposed Amendments to the Tax Code of the Russian Federation envisage the transfer to the constituent entities of the Russian Federation of 0.5% of the rate of tax on the profit of an organization. This change would bring the maximum rate of the profit tax to be paid into the budgets of the constituent entities of the Russian Federation to 18%. In the circumstances expected in 2009, this will guarantee additional revenues for the regional budgets in the amount of about 43.1 billion roubles.

Simultaneously, a proposal has been tabled to pass a separate Draft Federal Law On Introducing Amendments to the Budget Code of the Russian Federation and the Federal Law On Introducing Amendments to the Budget Code of the Russian Federation in regards to the Regulation of the Budget Process and Harmonisation of Selected Legislative Acts of the Russian Federation with the Budget Legislation of the Russian Federation, which envisages an increase of the share of excise in automobile fuel, straight-run gasoline , diesel fuel, and engine oils for diesel and carburetor (injector) engines paid into the budgets of the constituent entities of the Russian Federation from 60% to 100%. Additional revenues for the budgets of the constituent entities of the Russian Federation in 2009 will amount to an estimated 59.4 billion roubles.

Thus the adoption of the proposed laws will increase the revenues of the budgets of the constituent entities of the Russian Federation by a total of 102.5 billion roubles and will fully compensate for the shortfall in revenues brought about by amendments to the tax legislation.

7. On the Draft Federal Law On Introducing Amendments to the Federal Law on the Federal Budget in 2009 and the Planning Period of 2010-2011.

The Draft Federal Law On Introducing Amendments to the Federal Law on the Federal Budget for 2009 and the Planning Period of 2010and -2011 aims at timely implementation of additional measures and actions of the Government of the Russian Federation intended to improve the situation in the financial sector and some sectors of the economy.

1. The proposed amendments envisage approval of a new edition of the Programme of State Guarantees of the Russian Federation in the Currency of the Russian Federation for 2009 and the Planning Period of 2010 and2011.

The proposed edition of the Programme of State Guarantees of the Russian Federation envisages the granting of two new types of state guarantees of the Russian Federation in 2009 totaling 300 billion roubles:

• loans to strategic enterprises and organizations in the defence industry to finance their core production activities and capital investments in the amount of 100 billion roubles;
• loans to enterprises selected under the procedure established by the Government of the Russian Federation to finance the core production activities and capital investments in the amount of 200 billion roubles.

The sources of financing the federal budget deficit envisage the allocation of an additional 187,500.0 million roubles to finance said state guarantees of the Russian Federation, of which:

• 30,000 million roubles in 2009;
• 120,000 million roubles in 2010;
• 37,500 million roubles in 2011.

Thus the total sum of budget allocations to finance possible state guarantees of the Russian Federation from the sources of deficit financing of the federal budget will amount to:

• 37,219.8 million roubles in 2009;
• 132,700 million roubles in 2010;
• 50,200 million roubles in 2011.

2. In order to implement the two new types of guarantee support envisaged under the new edition of the Programme of State Guarantees of the Russian Federation, it is necessary to introduce some amendments to Articles 1, 16, 17, 22, and 25 of the Federal Law.

Thus, the amendments introduced in Article 16 of the Federal Law would raise the cap on the internal government debt of the Russian Federation under state guarantees of the Russian Federation in the currency of the Russian Federation by 300 billion roubles. In connection with this, the internal government debt of the Russian Federation under state guarantees of the Russian Federation in the currency of the Russian Federation will amount to:

• as of January 1, 2010 - 463,040,885,000 roubles;
• as of January 1, 2011 - 492,673,110,000 roubles;
• as of January 1, 2012 - 477,671,780,000 roubles.

The increase in the internal government debt of the Russian Federation under state guarantees of the Russian Federation in the currency of the Russian Federation also entails an increase in the overall size of the internal government debt of the Russian Federation that, in accordance with the amendments being introduced in Article 1 of the Federal Law, will amount to:

• as of January 1, 2010 - 2,419,739,195,300 roubles;
• as of January 1, 2011 - 3,136,689,331,300 roubles;
• as of January 1, 2012 - 4,003,224,731,200 roubles.

To optimize and expedite the work on said types of guarantee support it is necessary to bring in an agent of the Government of the Russian Federation. Therefore, the amendments introduced in Article 22 of the federal law would vest Vneshekonombank with the functions of the government agent on the issues of granting and implementing the corresponding state guarantees of the Russian Federation as well as the keeping of an analytical account of the obligations of the principal, its guarantors and other individuals in connection with the granting and implementation of state guarantees of the Russian Federation and collection of the debts of said individuals. Similar functions of an agent of the Government of the Russian Federation are already fulfilled by Vneshekonombank with regard to other types of guarantee support.

Furthermore, to streamline the procedure of granting state guarantees of the Russian Federation, amendments are being introduced in Articles 16 and 17 of the federal law pertaining to the limits on state guarantees of the Russian Federation, which may be authorised by the Finance Ministry of the Russian Federation in cases specified by the federal law on the federal budget for the corresponding year and planing period and related government acts.

Thus, the limit on state guarantees of the Russian Federation in foreign currency is raised from $50 million to $150 million for each state guarantee of the Russian Federation. In addition, a similar norm for state guarantees of the Russian Federation in the currency of the Russian Federation is to be introduced with a limit of up to 5 billion roubles for each state guarantee of the Russian Federation. Such amendments correspond to the amendments that are currently being introduced in Clause 1, Article 116 of the Budget Code of the Russian Federation.

3. The draft law envisages amendments to Part 6, Article 25 of the Federal Law aimed at:

• increasing the maximum amount of federal budget money that the Government of the Russian Federation may use to improve the situation in the financial sector;
• confirm the possibility of directing part of that sum to support the labour market in the Russian Federation.

The introduction of that amendment is necessary to implement clauses 29 and 30 of the Action Plan aimed at rehabilitating the financial sector and some sectors of the economy approved by the Prime Minister of the Russian Federation Vladimir Putin on November 6, 2008, and to enhance the role of the Government of the Russian Federation and the federal executive power bodies in regulating the labour market in the event that the labour market situation deteriorates in some regions of the Russian Federation.

8. The Draft Federal Law On Introducing Amendments to Articles 52 and 522 of the Law of the Russian Federation on Education

Ensuring accessibility to preschool education as a factor that improves the demographic situation in the Russian Federation is one of the priorities of the government policy in the field of education.

In the 2007-2008school year, the Russian Federation had 47,255 educational institutions of pre-school general education with 5,400,000 pupils.

The problem of accessibility to pre-school education is addressed at the federal, regional, and municipal levels in two main areas: creating enough places in the educational institutions that implement the basic preschool education programme, and making preschool education affordable by establishing a fee for keeping children in these institutions that all categories of Russian citizens can afford to pay.

At present, all the constituent entities of the Russian Federation compensate part of the parents' pay for having their children at state and municipal education institutions that implement the main general pre-school education programme.

At the same time, according to information coming from the regions, a significant portion of Russian citizens with pre-school age children is not covered by the social benefit of compensation of part of the parents' fee: these are parents whose children go to non-governmental preschool childcare institutions that implement the basic pre-school general education programme. According to Rosstat, such children account for about 3% of the total number of pre-school age children in preschool education, i.e. about 160,000 children.

To implement the principle of social equality in the sphere of pre-school education in the Russian Federation, it is necessary to spread the new social support measure - compensation of part of the parents' fee - to those citizens whose children attend non-governmental pre-school childcare institutions.

9. The Draft Federal Law On Introducing Amendments to the Federal Law On Additional Social Security for Members of the Flight Crews of Civil Aviation Aircraft

The aim of the Draft Federal Law On Introducing Amendments to the Federal Law on Additional Social Security for Members of the Flight Crews of Civil Aviation Aircraft is to clarify the procedure and timeframe of the payment of contributions to additions to the pensions of the members of flight crews of civil aviation aircraft transferred to the Pension Fund of the Russian Federation by aviation enterprises, which employ aircrews of civil aviation aircraft, and making the tax bodies responsible for monitoring proper computation and payment of said contributions.

The amendments proposed under this draft law would ensure timely and complete payment by the aviation enterprises of additional contributions and accordingly increase the pensions of the citizens entitled to said additions.

The draft law envisages a change of the name of additional insurance premiums paid by the employers of flight crews of civil aviation aircraft in accordance with the tariff of insurance premiums paid into the Pension Fund of the Russian Federation over and above the rate of the unified social tax: they are to be named contributions to the payment of additions to the pensions paid by employers of members of flight crews to the Pension Fund of the Russian Federation. This is necessitated by the fact that the legal nature of contributions toward additions to the pension does not correspond with the definition of insurance premiums in mandatory pension insurance contained in the Federal Law On Mandatory Pension Insurance in the Russian Federation, and the fact that said contributions don't participate in forming the size of the insurance and accumulated parts of the labour pension.

The size of the additional contribution remains the same: 14%.

Under the draft law, the list of organizations employing flight crews and paying said contributions is to be determined under a procedure to be established by the Government of the Russian Federation.

The draft law clarifies the procedure for entitlement, payment (resumption of payment) of additions to the pension and recalculation of its size, the procedure for the payment of contributions in the event the organization concerned has autonomous units located outside the Russian Federation. In addition, in accordance with the provisions of the Tax Code of the Russian Federation, employers are to be responsible for timely transfer of the contributions and for declaring all the contributions and other data.

Under the draft law, the Pension Fund of the Russian Federation will keep a separate centralized account of the assets on the assumption that the Budget Code of the Russian Federation envisages a transition to treasury implementation of the Fund's budget.

The implementation of the draft law will be financed by the contributions to the Pension Fund of the Russian Federation for additions to the pensions transferred by the aviation enterprises employing flight crews of civil aviation aircraft, and will not entail any additional federal budget spending.

10. The Draft Federal Law On Introducing Amendments to Some Legislative Acts of the Russian Federation to Enhance Control of the Turnover of Precursors of Narcotic and Psychotropic Substances.

An inalienable part of the system of measures to counter illegal turnover of narcotics and psychotropic substances is tight control over the turnover of their precursors -substances used to produce, prepare, and process narcotics and psychotropic substances.

In connection with this, Clause 8, Article 2 of the Single Convention on Narcotic Drugs 1961 and Clause 9, Article 2 of the Convention on Psychotropic Substances 1971 envisage that the substances that may be used to prepare narcotics and psychotropic substances be subject to the control measures set forth in Article 12 of the United Nations Convention against the Illicit Traffic in Narcotic Drugs and Psychotropic Substances,1988.
At the same time, the laws of the Russian Federation have some legal gaps and contradictions that allow the leakage of precursors into the illegal traffic.

Under Clause 1, Article 28 of Federal Law No.3-FZ of January 8, 1998 On Narcotics and Psychotropic Substances, narcotics, psychotropic substances, and precursors may be imported into and exported from the territory of the Russian Federation by state unitary enterprises that possess a license to engage in this kind of activity. However, Russian legislation does not envisage the licensing of the import and export of narcotics, psychotropic substances, and precursors as a distinct type of activity.

Furthermore, under Clause 2, Article 1 of Federal Law No. 128-FZ of August 8, 2001 On the Licensing of Certain Types of Activities, this law does not apply to foreign economic transactions.

It has to be noted that at present, in order to import (export) narcotics, psychotropic substances, and precursors, a one-off license must be obtained from the Ministry of Economic Development in accordance with the rules of import into the Russian Federation and export out of the Russian Federation of narcotics, psychotropic substances, and precursors approved by Decree No. 527 of the Government of the Russian Federation of August 18, 2007.

The prepared draft federal law is aimed at eliminating that discrepancy in the legislation of the Russian Federation and envisages that the import (export) of narcotics, psychotropic substances, and precursors requires a license, not merely to engage in said type of activities, but a license expressly to export (import) issued by the federal executive power body that exercises state regulation in the field of foreign trade activities. That provision of the draft law accords with the Federal Law On the Basic Principles of State Regulation of Foreign Trade Activities.

Under Clause 3, Article 28 of Federal Law No.3-FZ unitary enterprises must obtain corresponding permits for each case of customs border crossing. Said article does not take into consideration the fact that precursors can be imported (exported) by legal entities of a different legal form.

In connection with this, it would be practicable to spread the procedure of import (export) of precursors to other categories of business entities by introducing corresponding amendments to Article 28 of Federal Law No. 3-FZ.

The practice of licensing foreign trade transactions with precursors shows that the issue of control over chemical products that include one or several precursors requires legal regulation. The draft law would put precursor containing mixtures of substances in the category of "preparations" (para 6, Article 1, Federal Law No. 3-FZ).

It is necessary to note that such an amendment would eliminate the discrepancy between the current definition of the notion "preparation", which includes substance mixtures containing only narcotics or psychotropic substances, and Clause 5, Article 2 of the Federal Law No. 3-FZ, which also includes precursors containing mixtures.

Under Clause 2, Article 30 of Federal Law No. 3-FZ, legal entities may buy precursors and use them in their own production if they possess a license for that type of activity. However, Federal Law No. 128-FZ makes no provisions for the licensing of such activities.

It is notable that under subclause ii, Clause 8, Article 12 of the 1988 Convention, the turnover of precursors is subject to licensing.

On the strength of the above, the draft law proposes to make an addition to Clause 1, Article 17 of Federal Law No. 128-FZ and to amend Articles 4 and 30 of Federal Law No. 3-FZ to include activities connected with the turnover of some precursors (included in Table 1 attached to the 1988 Convention, with the exception of potassium permanganate) in the category of licensed activities.

An important element in counteracting trafficking in drugs, psychotropic substances, and precursors is the operational and detective activity of law enforcement bodies. However, Article 36 of Federal Law No. 3-FZ allows the use in operational-detective activities without a license of narcotics and psychotropic substances only.

In connection with this, the draft law proposes including precursors in Article 36 of Federal Law No. 3-FZ.

One element of control over the turnover of precursors is their accounting and reporting. At present, under Article 37 of Federal Law No. 3-FZ, legal entities are obliged to report only the activities connected with the turnover of narcotics and psychotropic substances, which does not allow for full control of the turnover of precursors. The draft law would make it compulsory for legal entities to also report the turnover of precursors by introducing corresponding amendments to Article 37 of Federal Law No. 3-FZ.

At present, precursors are included in List IV of Narcotics, Psychotropic Substances, and Precursors Subject to Control in the Russian Federation approved by Decree No. 681 of the Government of the Russian Federation of June 30, 1998.

The fact whether the precursor constitutes the main part of the molecule of the narcotic or is merely a reagent or solvent in the process of its synthesis is ignored.

Thus the rules and measures of liability for their violation in this sphere are the same and do not depend on the degree of danger to the public posed by illegal use of a specific precursor, which is at odds with the prevalent world practice, sets additional obstacles to the development of the chemical and other industries, and is not conducive to more effective control over the turnover of precursors.

Furthermore, Clause 5 of Protocol No. Pr-1150 of the operational meeting of the Russian Security Council of June 16, 2007 "On Measures to Improve State Control over the Turnover of Chemical Substances (Precursors) Used in Illicit Preparation of Narcotics and Psychotropic Substances" directs the federal executive power bodies to consider the issue of differentiating control measures with regard to various types of precursors.

The draft federal law proposes differentiating the measures of control over the turnover of precursors by dividing List IV into three tables.

It should be noted that the differentiation of control measures with regard to precursors by dividing them into three categories is recommended in the report of the Chemical Action Task Force (CATF) set up by the G7 industrialized countries in 1991.

The adoption of a federal law would require the introduction of amendments to Decree No. 681 of the Government of the Russian Federation of June 30, 1998 On Approving the List of Narcotics, Psychotropic Substances and Their Precursors Subject to Control in the Russian Federation and No.527 of August 18, 2007 On the Procedure of Import Into and Export Out Of the Russian Federation of Narcotics, Psychotropic Substances, and Their Precursors involving the division of list IV into the three above mentioned tables, as well as Decree No. 644 of the Government of the Russian Federation of November 4, 2006 On the Procedure of Submitting Information on Activities Connected with the Turnover of Narcotics and Psychotropic Substances, and the Registration of Transactions Connected with the Turnover of Narcotics, Psychotropic Substances and Their Precursors with regard to the reporting by legal entities and individual entrepreneurs of their activities connected with the turnover of precursors.

In addition, for the purpose of implementing the federal law, the Government of the Russian Federation will need to issue the following decrees:

• On the Procedure of Access to Activities Connected with the Turnover of Precursors of Narcotics and Psychotropic Substances;
• On Approving the Rules of Licensing the Activities Connected with the Turnover of Precursors of Narcotics and Psychotropic Substances;
• On Approving the Rules of Production, Preparation, Processing, Sale, Purchase, Use, and Storage of Precursors of Narcotics and Psychotropic Substances;
• On the Procedure of Import into and Export out of the Territory of the Russian Federation of Narcotics, Psychotropic Substances, and Their Precursors by Military Units and Organizations of the Federal Defence Executive Body.

In light of the need to prepare said acts of the Government of the Russian Federation, Article 3 of the draft law stipulates that the federal law will take effect 90 days after its official publication.

The adoption of the federal law will not require any additional federal budget spending.

11. The Draft Federal Law On the Ratification of the Agreement on Cooperation of Member-States of the Commonwealth of Independent States in Combating the Theft of Automobiles and Securing Their Recovery

The draft federal law would ratify the Agreement on Cooperation of Member-States of the Commonwealth of Independent States in Combating the Theft of Automobiles and Securing Their Recovery. This is because the Agreement contains different laws than those envisaged under Russian legislation in regards to the exemption of recovered vehicles from customs duties, taxes, excise, levies, and other payments connected with the movement of vehicles across the border.

The Agreement should be ratified to meet the need for closer interaction of the competent bodies of Russia and the members of the Commonwealth of Independent States in the context of international crime.

The Agreement regulates the cooperation of the members of the Commonwealth of Independent States in organizing control over the theft of automobiles and securing their recovery at the international level.

The Agreement has been signed by 10 CIS states: Azerbaijan, Armenia, Belarus, Georgia, Kazakhstan, Kyrghyzia, Moldova, Russia, Tajikistan, and Ukraine.

The implementation of the Agreement in the Russian Federation would create a solid legal-treaty basis for cooperation with the member-states of the Commonwealth of Independent States in combating the theft of automobiles and securing their recovery to the territory of another state, and will also enhance the activities of competent bodies of the signatory-states to the Agreement in combating this type of crime.

12. The Draft Federal Law On Ratification of the Agreement Between the Government of the Russian Federation and the Government of the Republic of Kazakhstan on the Procedure of Crossing the State Russian-Kazakhstan Border by the Inhabitants of Border Areas of the Russian Federation and the Republic of Kazakhstan

The Agreement Between the Government of the Russian Federation and the Government of the Republic of Kazakhstan on the Procedure of Crossing the State Russian-Kazakhstan Border by the Inhabitants of Border Areas of the Russian Federation and the Republic of Kazakhstan has been prepared to meet the mutual interest of the Russian Federation and the Republic of Kazakhstan in enabling their citizens who live in border areas to maintain the historically close friendly and kinship ties.

Under the Agreement, that category of citizen can cross the Russian-Kazakhstan border upon producing their ID papers listed in Supplement 3 to the Agreement not only in designated crossing points, but also in the places where they are crossing the border, which significantly simplifies border and customs formalities. Furthermore, the crossing of the Russian-Kazakhstan state border under the terms of this Agreement does not require the filling out of migration cards.

The Agreement contains rules that differ from those envisaged under the laws of the Russian Federation and is subject to ratification pursuant to subclause "a", Clause 1, Article 15 of the Federal Law On International Treaties of the Russian Federation.

The implementation of the Agreement would not require additional federal budget spending.

13. Introducing Amendments to the Regulations on the Federal Tariff Service

The amendments proposed in the draft decree are aimed at harmonising the Regulations on the Federal Tariff Service pertaining to the clarification of some powers of the FST of Russia with Federal Laws No.230-FZ of October 18, 2007 On Introducing Amendments to Some Legislative Acts of the Russian Federation in Connection with the Further Delimitation of Powers and No. 250-FZ of November 4, 2007 On Introducing Amendments to Some Legislative Acts of the Russian Federation in Connection with the Implementation of Measures to Reform the Unified Energy System.

The draft decree proposes amendments pertaining to the powers:
• to set prices (tariffs) on the services of the commercial operator of the wholesale market of electrical energy and power, payment for technological connection to the unified national (All-Russia) power grid and standard tariff rates, tariffs on the services of operational-dispatcher control in the power industry;
• to monitor the activities of the organizations that belong to the commercial infrastructure of the wholesale market of electrical energy and power within their jurisdiction, to impose payment for technological connection and/or standard tariff rates that determine the size of the payment;
• to settle the disputes connected with the fixing and collection of payment for technological connection and/or tariff rates set by the state price (tariff) regulation agencies to determine the amount of such payment (standard tariff rates).

14. The participation of the Russian Federation in the Programme to combat the global food crisis and making the voluntary contribution from 2008 to 2010 to the Programme's multilateral trust fund under the auspices of the World Bank.
The rise in world prices for staple foods exerts a negative impact on the purchasing power of the poorest social strata in developing countries, which spend up to 80% of their disposable income to buy food, has a negative impact on the revenues of developing countries from foreign trade, on budget stability and welfare. The countries that are net importers of hydrocarbons and food are the most vulnerable to such an influence.

Following the results of the G8 Summit on the Island of Hokkaido (Japan) on July 7-9, 2008, it has been decided to pool the efforts of the world community in overcoming the global food crisis and to support the creation by the World Bank of a new programme to finance activities to counteract the global food crisis in the total amount of up to $1.2 billion.

The Programme is aimed at reducing the negative consequences of the high and unstable food prices for the poorest social strata and at creating conditions for sustainable growth of food production. The Programme stipulates the creation of a multilateral trust fund to restructure the existing projects of the International Bank for Reconstruction and Development and the International Development Association (projects prepared and approved over a three-year period starting from 2009).

Russia's financial contribution (of up to $15 million) to the Programme's Multilateral Trust Fund will contribute to fulfilling the decisions of the Hokkaido G8 Summit, making food aid more effective and providing access to food for the most vulnerable social strata in developing countries, and will make it possible to use the contribution money in areas that the Russian Federation considers to be priorities.

15. The issue to the administration of the Sakhalin Region of government housing certificates to be distributed to the citizens who lost their housing in the Nevelsk District of the Sakhalin Region as a result of the earthquake on August 2, 2007.

The draft executive order has been submitted by the Ministry of the Russian Federation for Civil Defence, Emergency Situations, and Liquidation of the Consequences of Natural Disasters pursuant to instructions No. SN-P4-6404 of the Government of the Russian Federation of December 14, 2007 and in accordance with the Regulations of the Government of the Russian Federation.

The draft executive order has been prepared in accordance with the Rules of Budget Allocations out of the Reserve Fund of the Government of the Russian Federation for Preventing and Liquidation of Emergency Situations and the Consequences of Natural Disasters approved by Decree No. 750 of the Government of the Russian Federation on October 13, 2008.

As a result of the earthquake in the Nevelsk District, Sakhalin Region on August 2, 2007, the population has suffered seriously, significant material damage has been caused to housing and utilities, the social sphere, and federal property; furthermore, 7761 people (3406 families) have lost their homes.

The Sakhalin Region Administration estimates the total material damage caused by the emergency at more than 10 billion roubles, and the regional and municipal budgets have spent about 400 million roubles to clean up its aftermath.

With regard to the use of the Reserve Fund of the Government of the Russian Federation for the Prevention and Liquidation of Emergency Situations and the Consequences of Natural Disasters, the Government of the Russian Federation has ordered the following payments to the administration of the Sakhalin Region:

• 1909 Government housing certificates for citizens who lost their homes (No.1297-r of September 28, 2007, No. 1452-r of October 20, 2007, and No.1120-r of August 4, 2008);
• 191.82 million roubles in material relief for citizens who have lost their property (No.1281-r of September 27, 2007 and No.1453-r of October 20, 2007);
• 418.32 million roubles to finance urgent restoration of the damaged facilities (No.105-r of February 4, 2008);
• 224.17 million roubles to cover part of the cost of relief and rescue work, the creation and maintenance of temporary accommodation and catering facilities for evacuated citizens, material relief for the victims in connection with the loss of property (No. 411-r of March 29, 2008).

Under the draft executive order, the administration of the Sakhalin Region is to be issued 147 government housing certificates in 2008 to be distributed among the citizens who have lost their homes and have the right to obtain such certificates under court rulings. The adoption of the draft executive order will significantly ease social tensions in the Nevelsk District of the Sakhalin Region.

The cost of the 147 government housing certificates will amount to 348.10 million roubles, according to the Russian Finance Ministry's estimate.

The government housing certificates will be paid for out of the Reserve Fund of the Government of the Russian Federation for the Prevention and Liquidation of Emergency Situations and the Consequences of Natural Disasters.

According to Finance Ministry information, out of the 12,077.80 million roubles earmarked by the 2008 Federal Budget from the Reserve Fund of the Government of the Russian Federation for the Prevention and Liquidation of Emergency Situations and the Consequences of Natural Disasters, the balance as of November 24, 2008 is 3,675.54 million roubles (taking into account the proposed decisions of the Government of the Russian Federation that have been considered by the Finance Ministry).

16. Changes in the Composition of the Presidium of the Government of the Russian Federation

December 10, 2008
Moscow

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* Press releases by the Department of Press Service and Information contain the materials submitted by the executive federal bodies for discussion by the Presidium of the Government of the Russian Federation.