Accessibility links

Breaking News

Russia's Draft Budget Reflects Increasing Economic Confidence

The Russian Duma, or lower house of Parliament, concluded its spring session Friday, passing a draft budget that reflects growing confidence in the country's financial stability. VOA Moscow correspondent Peter Fedynsky examines the basis for such confidence.

The budget bill passed by the Duma will not become law unless it is approved by the Federation Council, or upper house, which adjourns next week. What is noteworthy, however, is that Duma members passed a medium-term financial plan. Lower deputy house speaker Vladimir Pekhtin says this reflects Russia's increasing ability to plan ahead.

Pekhtin says a three-year plan reflects a stable economy and consistent growth. We can now plan the use of resources not for sixth months, like we did in the past, but with a view toward the future.

The proposed budget is based on projected revenue increases from 2008 through 2010. Expenditures are also expected to rise, with surpluses anticipated in the first two years. A balanced budget is predicted in the final year with revenues of $310 billion (8 trillion rubles) to be offset by the same amount of expenditures. The $310 billion figure is just over 18 percent of Russia's projected gross domestic product, which is expected to reach about $1.7 trillion (39.7 trillion rubles) in 2010.

A substantial portion of Russian state revenues come from sales of oil and gas. However, economist Oleg Zamulin of Moscow's New School of Economics says more than half of government finances are derived from taxes on corporations and income.

Zamulin says income taxes have been lowered to 13 percent and it has become more convenient for many people to earn money openly than to work in the shadow economy, which makes people more willing to reveal their profits.

But Zamulin says the interests of the average Russian are still not a high budget priority. He says the military, police and transportation get most of the funding. The budget does call for increases in social spending, but for the average Russian, he says, there is still much to be desired.

The draft budget would raise the minimum wage in Russia to about $90 per month on September 1. The country's various regions would be allowed to add to that figure. And pensions over the next two years would rise by no less than 65 percent.