Russian Finance Minister Answers Putin’s Criticism Of Three-Year Federal Budget

(Interfax – Moscow, 19 September)  The Russian president’s decrees of 7 May, which reflect (Vladimir Putin’s) election campaign ideas, are a priority, and R1,145bn (36.7bn dollars) is to be spent on their implementation over the next three years, Russian Finance Minister Anton Siluanov told journalists.

“The implementation of the decrees is a priority. For all the ministries and agencies, this is a matter of priority. We took a special budgetary manoeuvre in order to find resources in the budget,” he said.

The minister said that R277bn (8.9bn dollars) has been envisaged for the implementation of the decrees in 2013, R381bn (12.2bn dollars) in 2014 and R487bn (15.6bn dollars) in 2015.

The minister said that funds for the implementation of the decrees had to be factored in while drafting the budget for the next three years, which takes account of the budget rule (linking expenditure to oil price forecasts).

“This was not easy,” he stressed. Funds for the implementation of the decrees had to be found within the budget. “We had to resort to a budgetary manoeuvre involving the optimization of one part of the expenditure, the postponement of another part and the approval of so-called credit schemes for yet another part,” the minister explained.

According to him, the credit schemes particularly affected some of the state procurement spending, including spending on arms and individual state programmes. “Instead of direct funding from the budget, they will receive credit resources under state guarantees for interest rate subsidies, with subsequent payment at the time of contract delivery or the deferral of delivery,” Siluanov said.

According to him, one of the reasons why it was difficult to carry out such a manoeuvre was that ministries “naturally have a painful reaction to certain expenditure items being deferred or cut”.

(A separate Interfax report quoted Siluanov as saying that there was no need to amend the draft federal budget for 2013-15 as it already reflected spending on items envisaged by Putin’s decrees. “All the budget parameters will remain in the same format as we submitted them. No changes and amendments to the budget are taking place,” Siluanov said. (Interfax news agency, Moscow, in Russian 1643 gmt 19 Sep 12)

His remarks appeared to be at odds with Putin’s assertion at a government meeting on 18 September that the proposed draft budget in its current form would not allow the provisions of his decrees to be implemented. Putin also claimed that the budget had been drafted without any account being taken of pension reform. “How can you draft a budget for next year and the year after that without tackling one of the key tasks of the economy?” Putin asked the meeting. (Interfax news agency, Moscow, in Russian 1230 and 1244 gmt 18 Sep 12)

Responding to Putin’s latter point, Siluanov was reported by Interfax as saying that “whatever decision is made on the further development of the pension system, it can be implemented as part of the 2013-15 budget”. (Interfax news agency, Moscow, in Russian 1715 gmt 19 Sep 12))