Russian Deputy Prime Minister Alexander Zhukov held a meeting in Smolensk with the heads of constituent entities of the Russian Federation in the Central Federal District. 

Alexander Zhukov noted in his address to the meeting that the Government is planning to lower the budget deficit to 3% by the year 2012.
"The deficit of the 2010 budget will amount to 3.2 trillion roubles, which is 7.5% of GDP. This is the highest deficit that we can allow," said Mr. Zhukov.

Mr. Zhukov also announced that in 2010, the regions will have the right to double transport taxes.
"Regions will be granted the right to increase transport taxes by 100%, to be used for road construction among other things," he said.

In addition, Zhukov said that the 2010 federal budget will provide 125 billion rubles in loans to the regions, including 25 billion for road facilities.

Mr. Zhukov said that the policy regarding inter-budget relations in 2010-2012 will try to correct the methods of providing financial aid to constituent entities and municipalities, as well as to stimulate the growth of the revenue base and improve the quality of budget management at the regional and local levels.

Mr. Zhukov holds that providing subsidies is expedient only when they are used to level significant differences between regions and provide for improving the quality of state services, or their provision is conditioned by the uneven distribution of the users of individual state services in the constituent entities.

"Government subsidies will be conditioned with clearly specified goals and deadlines for reaching indicated goals, at the end of which, the subsidies will be discontinued," said Mr. Zhukov.