Background material for the June 15, 2009 meeting
The following issues are scheduled for discussion at the Government Presidium meeting on June 15, 2009:
I. Progress in fulfilling the federal targeted programmes and implementing the federal targeted investment programme in the first quarter of 2009.
1. The implementation of the federal targeted programme in the first quarter of 2009 has brought the following results:
In 2009, 53 federal targeted programmes in the open part of the federal budget will be financed at a cost of 990.1 billion roubles, of which the spending on state capital investment is 651billion roubles (budget investment in the amount of 503.2 billion roubles and subsidies for co-financing of capital construction projects owned by the regions of the Russian Federation and municipalities included in the federal targeted programmes in the amount of 147.7 billion roubles), for R&D, 92 billion roubles and for "other needs" 247.1 billion roubles.
During the reporting period 4,277 long-term contracts and 1,705 contracts concluded since the beginning of 2009 are being implemented at a cost of 409 billion roubles, or 41.3% of the annual budget allocations. Contracts worth 68.6 billion roubles have been concluded since the beginning of the year, which accounts for 6.9% of annual budget allocations.
Under some programmes of the Defence Ministry of Russia, Roscosmos, the Ministry of Industry and Trade, the Ministry of Education and Science and the state corporation Rosatom, more than 60% of the annual budget allocations have been contracted for by the state.
For two federal targeted programmes the contracts signed accounted for no more than 1.0% of the budget allocations for 2009, for eight programmes it varied between 1% and 10%, on another 13 programmes between 10% and 40% and on 10 programmes between 40% and 60%.
At the same time some state contractors concluded no contracts in the report period. They include the Ministry of Regional Development of the Russian Federation under the Programme of the Development of Kaliningrad Region in the Period until 2010, Social and Economic and Ethnic-Cultural Development of Russian Germans in 2008-2012, the Ministry of Defence of the Russian Federation under the programmes The Creation of a Black Sea Fleet Base on the Territory of the Russian Federation in 2005-2020 and The Development of Russian Space Centres in 2006-2015, the Ministry of Sport, Tourism and Youth Policy under the programme Development of Physical Fitness and Sports in the Russian Federation in 2006-2015, the Ministry of Industry and Trade of the Russian Federation under the programme Development of Civil Marine Technology in 2009-2016, the Ministry of Agriculture of the Russian Federation under the programme Social Rural Development until 2012.
The federal budget financing of federal targeted programmes in the first quarter of 2009 amounted to 87.5 billion roubles, or 8.8% of budget allocations for 2009, which is 43.3 billion roubles over the same period of 2008 (mainly due to increased financing of R&D).
The main budgetary allocations for state capital investment went to finance the following programmes:
For R&D, the largest resources were committed to the implementation of the federal space programme for 2006-2015 (Roscosmos) - 17.18 billion roubles.
The budgets of the regions of the Russian Federation, local budgets, as well as off-budget sources in the first quarter of 2009 contributed 69.3 billion roubles to the financing of the programmes, which is 5.6% of the allocations for the year, of which the regions of the Russian Federation and the local budgets contributed 23.5 billion roubles (6.5%) and off-budget sources 45.8 billion roubles (5.3%).
The largest amounts of resources were used by:
Five federal targeted programmes used between 4% and 9% of the allocated resources, seven programmes between 1% and 3%, eight programmes under 1.0% and 14 programmes did not use any resources.
The Ministry of Economic Development of the Russian Federation, proceeding from a comprehensive analysis of the fulfilment of federal targeted programmes in the first quarter of 2008 assessed the effectiveness of the implementation of federal targeted programmes.
The implementation of five programmes has been described as effective:
The effectiveness of the fulfilment of the remaining 34 programmes has been described as average.
2. The implementation of the federal targeted investment programme (FTIP) in the first quarter of 2009 has yielded the following results.
The Ministry of Economic Development of the Russian Federation reports that in accordance with the List of Construction Projects and Programmes in 2009, financing is envisaged for about 2,290 construction projects, programmes and measures (less construction projects and programmes that are included in the State Defence Order). Of these, 1,718 programmes, or 75% of the total number, are financed under the FTIP; and 572 programmes, or 25% of the total number slated for financing under the List of Construction Projects and Programmes, have been financed outside the FTIP.
In 2009, 992 programmes included in the List of Construction Projects and Programmes for 2009 are to be launched, which is 43.3% of the total number of programmes to be financed in the current year.
Of these 759 programmes (or 44.2% of the total number of programmes financed under the FTIP) and 233 programmes (40.7% of the total number of programmes financed outside the FTIP) are to be launched.
In the first quarter of 2009, 4 programmes were launched.
According to the Federal Treasury, in the first quarter of 2009 FTIP programmes and measures have been financed from the federal budget at a cost of 40.8 billion roubles (less state defence order), which is 7.4% of the total annual budget investments (less state defence order), of which: 29.7 billion roubles were disbursed as part of the FTIP (7.4% of the total budget investments under The Programme) and 11.1 billion roubles (7.6%) were disbursed outside the FTIP.
II. Stimulating innovative activities of enterprises which pursue research and development, commercialisation of the results of scientific-technical activities, technological designing and acquisition of new technologies.
The Ministry of Economic Development of the Russian Federation has submitted background material to be discussed at a meeting of the Presidium of the Government of the Russian Federation on stimulating innovative activities of enterprises which pursue research and development, the commercialisation of the results of scientific-technical activities, technological design and acquisition of new technology. In spite of the growing budget financing for research and development, the innovative activities of the enterprises have not increased as expected. During the period of 2005-2007 the share of the domestic private sector in domestic spending on research and development dropped from 30.0% to 29.4% while government spending increased from 61.9% to 62.6% respectively.
The above negative trends have been compounded by the economic crisis beginning in the second half of 2008. Faced with the need to optimise costs, many businesses choose to save on development, postponing future innovation projects, R&D expense and retrofitting for an indefinite period. This makes it imperative to take measures to rectify the situation.
To this end a draft plan of measures to stimulate innovative activities of enterprises in 2009-2010 as part of the implementation of the Basic Guidelines for the Activities of the Government of the Russian Federation in the Period until 2012, has been submitted.
The plan proposes a set of measures to support priority areas of technological development, improve the institutional environment of innovative activities and upgrade the existing infrastructure, to provide long-term incentives for innovation, including in the public sector, as well as to update the Government's anti-crisis measures to meet the requirements of innovative development.
The items in the plan fall into the following categories:
1) Support of priority areas for technological development.
2) Support of innovative activities for existing enterprises.
3) Improvement of the institutional environment, support for the creation of innovative businesses and upgrading the innovative infrastructure.
4) Providing incentives for innovation in the public sector.
The following are proposed as the main instruments of implementing the plan:
Considering the decisions taken in the sphere of budget policy, the items of the plan to be implemented in 2009 do not require additional budget funding and are aimed at enhancing the effectiveness of existing institutions for promoting innovative development and stimulating innovative development, included as part of anti-crisis measures. At the same time, adequate funding should be envisaged in the budget for the next plan period for measures to be adopted starting from 2010.
The conclusions state that the measures contained in the plan are intended to create a comprehensive system of state innovation policy for 2009-2010 which will be implemented as part of the Basic Guidelines for the Activities of the Government until 2012: Shaping an Effective National Innovative System and Creating a System of Support for Scientific and Technological Policy.
Certain measures intended to stimulate innovation in the economy can be implemented as part of other projects under the Basic Guidelines for Government Activities until 2012, in particular those connected with the development of small and medium enterprises (science-intensive business); the development of high technology sectors (aviation, aerospace, the nuclear industry, ship-building, electronics, etc.); the development of financial markets; more effective use of fuel and energy resources; the development of infrastructure; modernisation of education, healthcare and other social spheres; the introduction of new environmental standards.
III. Draft federal law On Introducing Amendments to the Budget Code of the Russian Federation
The timeframe of the introduction of the federal budget by the Government of the Russian Federation to the State Duma of the Federal Assembly of the Russian Federation.
At present, considering the unpredictable changes in world markets and in the Russian economy, introducing the draft federal law On the Federal Budget to the State Duma of the Federal Assembly of the Russian Federation four months before the beginning of the new fiscal year creates additional risks for financial and economic calculations not taken into account at the initial stages of budget planning which are removed in time from the moment the federal budget law comes into force.
Based on the above, the draft law would suspend in 2009 the provisions of the Budget Code of the Russian Federation, whereby the Government of the Russian Federation submits the Law On the Federal Budget for the next fiscal year and planning period to the State Duma not later than August 26 of the current year and the Central Bank of the Russian Federation submits to the State Duma the draft basic guidelines for the state monetary policy for the next fiscal year and the planning period before August 26 of the current year.
By the same token, the said draft law would be submitted by the Government of the Russian Federation to the State Duma not later than October 1, 2009; the Central Bank of the Russian Federation would submit the draft guidelines for the single state monetary policy for the next fiscal year and the planning period on the same date.
Considering the change in the date of the introduction of the draft federal law On the Federal Budget at the State Duma, the draft law proposes, in 2009, to postpone by a month the deadline for verification of the initial data for the preparation of the draft federal budget with the executive bodies of the regions of the Russian Federation.
Shortening the period of discussion of the federal budget and the budgets of state-off budget funds by the State Duma in 2009.
In connection with the change in 2009 of the date of the introduction at the State Duma of the draft federal law On the Federal Budget, the period allotted the State Duma to consider the draft Federal Budget would be reduced:
For the first reading, to 20 days after the draft law is submitted to the State Duma by the Government of the Russian Federation;
For the second reading, within 25 days of the approval of the first reading of said draft law;
For the third reading, within 5 days of the approval of the second reading of the said draft law. In addition, a similar timeframe is proposed for the consideration by the State Duma of the second and third readings of draft federal laws on the budgets of state off-budget funds of the Russian Federation.
That would make it possible to approve the federal law On the Federal Budget for 2010 and the Planning Period of 2011 and 2012, the federal laws on the budgets of state off-budget funds of the Russian Federation for 2010 and the planning period 2011 and 2012 and take all the necessary measures to ensure the implementation of the said federal laws before the beginning of the fiscal year.
Modification of approach to approving the targets of the federal budget for the planning period of 2011 and 2012.
Because of the uncertainty of medium-term forecasting parameters it is necessary to create a legal environment for approving the departmental structure of federal budget expenditure and the distribution of budget allocations by sections, subsections, target items and types of expenditure in the classification of federal budget expenditure only for 2010.
In this connection the draft law proposes to suspend in 2009 certain provisions of Articles 145, 192, 205 and 207 of the Budget Code pertaining to the approval for 2011 and 2012 of the departmental structure of federal budget spending, the distribution of budget allocations by sections, subsections, target articles and types of expenditure in the classification of federal budget expenditure and the distribution of inter-budgetary transfers between the regions of the Russian Federation, and also to suspend the requirement to submit to the State Duma the methodologies and calculations of the distribution of inter-budgetary transfers between the regions of the Russian Federation in 2011 and 2012 and proposals on the minimum pay, the size of stipends, the procedure for indexation of the salaries of the staff of federal public sector institutions, the salaries of federal civil servants for 2011 and 2012.
In accordance with the budget address of the President of the Russian Federation on budget policy in 2010-2012, it is necessary to introduce medium-term "caps" on budgetary expenditure in specific areas of state policy to counter the tendency of the responsible ministries to constantly increase spending and to use resources more effectively in the restructuring of current commitments.
To implement this approach it is proposed to include in the draft law a provision whereby the State Duma would consider in 2009 two supplements to the Federal Law On the Federal Budget, which contain the distribution of:
Budgetary allocations to the regions of budget planning for the planning period of 2011 and 2012;
Budget allocations by items in the classification of federal budget expenditure for the planning period of 2011 and 2012 that refers subventions, subsidies and other targeted transfers between budgets to the corresponding sections of the classification of federal budget expenditures other than subsidies for equalising the levels of budgetary sufficiency.
Such an approach, while preserving the basic principles of the medium-term federal budget, will provide the necessary benchmarks for budgetary allocations for the planning period of 2011 and 2012 to the regions of budget planning and create predictable conditions for the regions of the Russian Federation and municipalities.
It should be noted that the federal budget parameters approved for 2011-2012 will be replaced in the 2011-2013 budget cycle similarly to the way the main characteristics of the federal budget change because the departmental structure of federal budget spending for the planning period of 2011 and 2012 will not be approved in 2009.
The same approach is proposed for the distribution of expenditure in the planning period of 2011 and 2012 of the state off-budget funds of the Russian Federation.
Considering the changes in the format of approval of the federal budget, the issues of its implementation need to be regulated. Therefore the draft law proposes a provision to the effect that in implementing the federal budget for 2010 and the planning period of 2011 and 2012 the aggregate budget itemisation of the federal budget and the limits on budget commitments will be approved only for 2010.
Considering the amendments proposed by the draft law and the distribution of the workload of the State Duma, it is feasible to introduce a modification in Clause 1, Article 26410 of the Budget Code whereby the Government of the Russian Federation would submit an annual report on the implementation of the federal budget not simultaneously with the draft federal law On the Federal Budget, but not later than this draft law is introduced.
Suspending restrictions on the timeframe of adoption of amendments to the legislation on taxes and levies.
The Budget Code (Articles 53, 59, 64, 1741) restricts the timeframe of the adoption of amendments to the legislation of the Russian Federation on taxes and levies, the legislation of the regions of the Russian Federation on taxes and levies, the regulatory acts of representative municipal bodies on local taxes:
- the laws (acts) on introducing amendments to the legislation on taxes and levies (acts of the municipal representative bodies on local taxes) must be passed not later than one month after the corresponding law (act) has been submitted to the legislative (representative) body;
- the laws (acts) that envisage amendments to the legislation on taxes and levies (acts of representative municipal bodies on local taxes) passed after the day when the corresponding draft law (act) has been submitted to the legislative (representative) body that change the revenues (expenditure) of the budget system of the Russian Federation must contain provisions on the coming into force of the said laws (acts) not earlier than January 1 of the year following the next fiscal year.
The draft law would suspend the said restrictions in 2009 to make possible timely amendments to the legislation on taxes and levies (the acts of representative municipal bodies on local taxes) proceeding from current economic conditions.
Adjustment of requirements to the procedure of introducing and considering amendments to the Federal Law On the Federal Budget.
The procedure of introducing the draft federal law on amendments to the Federal Law On the Federal Budget for the current fiscal year and the planning period pertaining to supporting documents for the draft law hinders prompt reaction to the fast-changing economic situation.
To simplify the said procedure, the draft law proposes suspending in 2009 certain provisions of Article 212 of the Budget Code that requires the submission, simultaneously with the draft federal law, of expected outcomes of social and economic development in the current fiscal year, the updated forecast of social economic development in the planning period and assessment of the expected implementation of the federal budget in the current fiscal year.
If, when amendments to the Federal Law On the Federal Budget are introduced, the forecast of the overall budget revenues changes, the draft law proposes keeping the requirement for submitting updated results of the social and economic development in the current year.
Under Clause 2 of Article 213 of the Budget Code, when considering the draft federal law on introducing amendments to the federal budget in the first reading the State Duma approves amendments to the basic characteristics of the federal budget.
At the same time the draft federal law on introducing amendments to the federal law on the federal budget does not always envisage changes to the basic characteristics of the federal budget.
On the strength of the above, the draft law proposes not applying the provision of Clause 2, Article 213 of the Budget Code to draft federal laws that do not envisage introduction of amendments to the basic characteristics of the federal budget.
IV. Ratification of the agreement between the Government of the Russian Federation and the Government of the People's Republic of China on Cooperation in the Oil Sphere.
Pursuant to the provisions of the Memorandum on Mutual Understanding on Cooperation in the Oil Sphere between the Russian Federation and the People's Republic of China signed in Moscow on October 28, 2008, and pursuant to Executive Order No. 501-r of the Government of the Russian Federation of April 17, 2009, an agreement between the Government of the Russian Federation and the Government of the People's Republic of China on Cooperation in the Oil Sphere was signed in Beijing on April 21, 2009. The Agreement specifies the project of designing, building and operating the Skovorodino-Mohe oil pipeline.
The Skovorodino-Mohe oil pipeline has a capacity of 15 million tonnes of oil a year and comprises overland sections on the territories of the Parties (the pipeline from Skovorodino to the border with China on the territory of the Russian Federation) and the underwater crossing of the Amur River. The Skovorodino-Mohe oil pipeline is a branch of the Eastern Siberia-Pacific Ocean oil pipeline and will be created to diversify the export flows of Russian oil from fields in Western and Eastern Siberia. The PRC will be the primary market for the projected oil pipeline route.
The draft envisages, inter alia, the construction of the section of the Skovorodino-Mohe oil pipeline on the territory of the Russian Federation to the state border with the PRC (the Skovorodino-PRC border pipeline) with a diameter of 720 mm and the length of 65.2 km.
Under the project of the construction of Skovorodino-PRC border oil pipeline a government expert examination has been conducted of the overland section of the oil pipeline; contractors have begun construction.
The Agreement identifies the competent agencies of the Parties which coordinate its implementation as well as the companies of the Parties which implement the project; simultaneously the main terms of cooperation have been set forth and detailed.
In particular, the right of ownership of the pipeline from the oil pumping station Skovorodino to the state border with the People's Republic of China, including the riverbed section of the underwater crossing of the Amur River on the territory of the Russian Federation belongs to the authorised Russian organisation, namely, the open joint stock company for the transportation of oil, Transneft. The riverbed section of the underwater crossing of the Amur River is being designed and built by the authorised organisations of the Parties which bring in Russian and Chinese contractors. The Russian Party allocates for the time of the construction on the territory of the Russian Federation the necessary area adjacent to the construction location used as the restricted zone for the duration of construction and ensures organisation and functioning in the construction area of a border crossing point (for the period of construction). The principles of the creation and functioning of the said zone as well as the complex of the necessary measures to regulate navigation and the movement of personnel and technology in the construction zone are defined. The Chinese Party creates a similar restricted zone. The terms of the transfer of oil from the authorised Russian organisation to the authorised Chinese organisation at the operational stage are set forth.
To ensure timely development of the underwater crossing project, preparation of the project documentation, the creation of restricted zones, the development of the rules of simplified procedure of crossing the Russian-Chinese state border for the movement of goods and equipment used in construction as well as determining the procedure of the activities in the Russian and Chinese restricted construction zones, Article 19 of the Agreement (Clause 4) envisages temporary application of the provisions of Articles 3, 5, 7 and 11 from the date of its signing.
The Agreement is subject to ratification in accordance with subclause a), Clause 1, Article 15 of Federal Law No.101-FZ of July 15, 1995 On International Treaties of the Russian Federation because Article 13 of the Agreement sets different rules than those established under Russian laws, in particular, for access to the system of Russian long-distance pipelines and terminals in exporting oil beyond the customs territory of the Russian Federation. Under said article of the Agreement the Russian Party grants access to the pipeline for a period of 20 years for supplies of oil to the People's Republic of China to Transneft and the open joint stock company Rosneft to ensure the repayment of loans obtained under the loan agreements signed with the China Development Bank (PRC). Furthermore, Article 10 of the Agreement would exempt the building materials, equipment (including construction technology) and transport means as well as the services of the Chinese contractor (only with respect to VAT) from the payment of import customs duties, the Value Added Tax and customs clearance charges when importing (only from customs clearance charges when exporting). In addition, Article 15 of the Agreement determines that the interest and other payment towards the loans issued to Transneft and Rosneft under the loan agreements concluded pursuant to this Agreement are exempt from taxation in the signatory states.
V. Introducing amendments to Resolution No.329 of the Government of the Russian Federation of June 30, 2004 On the Ministry of Finance of the Russian Federation
VI. Introducing amendments to the Statute on the Federal Taxation Service
The Finance Ministry of the Russian Federation has submitted a draft Government resolution On Introducing Amendments to the Statute on the Federal Taxation Service.
The draft has been developed at the initiative of the Federal Taxation Service.
The Statute on the Federal Taxation Service approved by Resolution No. 506 of the Government of the Russian Federation of September 30, 2004 does not authorise the Federal Taxation Service to institute departmental decorations, which reduces the possibilities of motivating the work of tax employees with awards and incentives.
However, many federal services do have such rights (the Federal Financial Monitoring Service, the Federal Tariff Service, the Federal Hydrometeorology and Environmental Monitoring Service, the Federal Service for Supervision of Communications and Mass Media and others). The proposed decision should motivate the agency and individual officials towards more effective work.
It is expected that authorising the Federal Taxation Service of Russia to institute, under established procedure, departmental decorations, approve statutes on these decorations and descriptions thereof will help to strengthen the human resources of the Federal Taxation Service of Russia and enhance the responsibility and efficiency of the tax officials.
June 11, 2009
Moscow
*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
