Main results and trends of budget policy (стр. 15 )

Beginning in 2008 he Stabilization fund is divided into two: Reserve fund and Future generation fund (National welfare fund). The Reserve fund is charged with maintaining a financial reserve in the event of short-term fluctuations in the oil market and an ensuing federal budget deficit.

Moreover the Reserve fund shall finance the oil-and-gas transfer to the federal budget. The Reserve fund shall receive all federal oil-and-gas revenue throughout the year up to the amount dictated annually in the budget law.

The Reserve fund should have sufficient resource to close the deficit described above for three years. Beginning on Feb 1, 2008 the Reserve fund shall receive funds from the Stabilization fund in the amount of 10% GDP.

The remaining funds in the Stabilization fund of the Russian Federation will be transferred to the Future generations fund (National welfare fund); this fund shall be used toward maintaining and augmenting revenues from non-renewable natural resources for the future generations.

7.2 National Debt

In accordance with the principles of debt policy in 2005 and 2006 the Russian Federation sought to discharge external federal debt ahead of schedule. In January of 2005 the debt to the International Monetary Fund was discharged in full ahead of schedule. In June of 2006 the Russian Federation completely discharged its obligations to the Paris Club.

As a result, at present the level of national debt is kept at a safe level below 9% GDP (the amount of external debt will be brought down to 2.8% GDP by 2010), which provides for a stable financial system and advances Russia’s standing in the International community, as a nation with considerable financial and debt stability, having a reputation of a responsible borrower and striving to improve the countries investment climate through concrete measures.

The national debt policy of the Russian Federation for makes no provisions for attracting unattached financial credit on the external market.

In terms of internal loans the debt policy for will be guided by the objective of developing the bonds market. Key tasks will be raising the liquidity of the market portion of the federal internal debt and maintaining optimal duration and profitability in the bonds market.

The period of will see a positive balance of loans taken out in the internal market, which should keep interest rates steady. The federal government intends to take out medium and long-range loans in the internal debt market.

Conclusion

“Government spending at all levels must be oriented toward concrete results, which, in turn, must be attained through most effective means.”

The Budget Address of the President of the Russian Federation

May 9, 2007

The main objective of the fiscal policy for 2008, and through 2010 is to guarantee maximally effective and transparent use of funds in pursuit of concrete, quantifiable, socially significant results, while maintaining macroeconomic stability and a balanced, stable budget; this will in turn lead to a further increase of the nation’s financial abilities.

The federal budget for 2008 and through 2010 meets this challenge by providing:

quality of life, measured by:

reduced number of individuals living below the poverty line from 16% to 10.7%; raised correspondence between the average salary for government employees and the minimum living standard for the working population from 1.7 to 2.6; raised correspondence between the working pension and the minimum living standard for a pensioner from 1.01 to 1.32; increased volume of new housing from 50.8 mil m3 annually to 80.0 mil m3.

stable economic growth, characterized by:

a stable rate of economic growth at 6% GDP; a reduced inflation rate, from 5.0% to 6.0%; more than doubled investments into fixed capital; an increase in direct foreign investments: a factor of 1.5 in dollar amount.

confidence in the nation’s future, expressed in:

increased life expectancy at birth: up to 68.5 years; increased birth rate coefficient, from 10.5 to 11.6 births per thousand people annually; reduced mortality rate from 15.2 to 12.6-12.8 deaths per thousand people annually; a high level of scientific potential and development of priority science and technology fields; diversification of industry and an increased portion of innovative production among total exported and domestically sold products; reliable national security and capability to respond to external and internal threats.

Appendix

Some results of the use of budget appropriations made by the main federal budget funds managers

CBP – Constituent of Budget Planning (code and title)

MBFM – Main Federal Budget Funds Managers (code and title)

Section

Subsection

01 – Ministry of Industry and Energy of the Russian Federation
023 – Federal Energy Agency

04 – National Economy

02 – Fuel and Energy Sector

	Unit of measu­rement	Reporting period	Current year	Planned period	Resultant objectives/indicators the achievement of which has been aided by the results of using budget appropriations
2006 (actual)	2007 (approved)	2008	2009	2010
1	2	3	4	5	6	7	8
Measures in the fuel and energy sector	Amount of appropriation
SPE (Special-Purpose Expenditure Items) BE (Budget Expenditure) 012 - Performance of functions by budget institutions	*****bles	4,079,725.2	4,308,836.0	4,435,673.6	6,023,987.0	6,289,800.0
	Indicators value/ Qualitative description of the result
Indicator 1. Length of the underground workings to be liquidated	m	136,500	45,900	0	0	0	Completion of coal industry restructuring Objective: liquidation of coal companies
Indicator 2. Remediation of disturbed land returned to landowners	ha	150	2836	3834	5823	5357
Indicator 3. Social support to workers due to liquidation of coal (oil shale) mining (processing) companies	*****bles	1,306,400.0	1,423,900.0	708,500.0	710,600.0	814,300.0
Indicator 4. Number of rationed coal recipients in liquidated companies	people	61,351	58,894	56,545	61,000	50,000
Interest rate subsidizing	Amount of appropriation
SPE BE 006 - Subsidies to legal entities	*****bles	391,086.2	500,000.0	500,000.0	250,000.0	250,000.0	Creation of competitive business
	Indicators value/ Qualitative description of the result
Indicator 1. Fixed assets renovation	%	5	10	20	10	10
Investments in the fuel and energy sector	Amount of appropriation
SPE 34002 00 BE 003 – Budget Investments	*****bles	-	1,756,300.0	1,850,000.0	1,400,000.0	1,500,000.0	Increasing the efficiency of the fuel and energy sector and ensuring energy security
	Indicators value/ Qualitative description of the result
Indicator 1. The number of facilities under construction	items	-	5	2	1	1

	Unit of measu­rement	Reporting period	Current year	Planned period	Resultant objectives/indicators the achievement of which has been aided by the results of using budget appropriations
2006 (actual)	2007 (approved)	2008	2009	2010
1	2	3	4	5	6	7	8
Subsidies	Amount of appropriation
SPE BE 006 - Subsidies to legal entities	*****bles	400,000.0	400,000.0	400,000.0	400,000.0	400,000.0
	Indicators value/ Qualitative description of the result
Indicator 1. The number of subsidy recipients	units	60	45	45	45	45	Fuel procurement for power plants’ operational needs
Indicator 2. The number of subsidy recipients	units	4	4	4	4	4	Fuel procurement for sale to the population
Indicator 3. The number of subsidy recipients	units	1	1	1	1	1	Fuel procurement for nuclear power plants

CBP (code and title)