- The variant being defended by the leadership of the Ministry of Defense is worst for society on all socio-economic indicators chiefly because it does not eliminate the base for activity of criminal structures that are engaged in illegal granting of deferments and exemptions;
- All considered variants of intensification of the manning reform result in the positive outcome for the society;
- Most favorable for the society are variants that reduce service to 6 months, and also its purposes, or those that suggest full cancellation of draft service.
However, IET specialists think that the concept of six months term of draft service is more preferable.
First, this is explained by the fact that full cancellation of draft service will lead to sharp drop in the number citizens who are in the military trained reserve.
This is evidenced by Fig. 6, wherein the charts are presented of the absolute and efficient number of the military trained reserve of the first category (at the age under 35).
Fig. 6. Absolute and Efficient Number of the Mobilization Resources of First Category Мр1 in the Military Organization of the RF (thou. pers. by years) Of course, the question on the necessity to have such a reserve, which is also called a mobilization man-power resource, is politico-military, and not economic. Militarily, the presence of reserve is a powerful factor that curbs aggression and allows in short term to strengthen the potential of forces, which, if necessary, can stand against both the military aggression and terrorism.
Second, budgetary expenditures for maintenance of servicemen in waiving from draft will grow because of the need to pay a good deal of money to volunteers.
Third, a short-term draft of youth for their training of military fundamentals and taking a military oath after that, will heighten the level of patriotic understanding of the constitutional debt of defense of the fatherland and equal responsibility for that of representatives of various social strata of the Russian modern society.
In view of the above, it seems practical to adopt, first, the concept of reducing the term of draft to six months and changing of its purposes, and only then, when the level of military and terroristic threats will be lowered to an extent that we may get rid of it, only then we can fully cancel the draft.
However, in any case, attention to the socio-economic aspect of the manning problem seems to be most actual. The words of the minister of defense – “we must support a balance between the expenditures on equipment and social sphere, otherwise there will be nobody to work on it”, that he said on August 26, in association with presentation of draft budget for 2006, - must be spread first of all on privates and non-commissioned officers. It is just they, together with regular officers, who are working with equipment. That is why we should correct the defense budget for 2006, and the more so, financial projections for 2006-2008 for reaching just this goal – switching of regular troops exclusively to contractual basis.
V.I. Tsymbal, N.I. Kardashevsky Issues Considered at the Sessions of the RF Government of August 4 and Among the issues considered by the RF government at the sessions in August 2005 of special interest were the report of the minister of economic development and trade Gref G.O. “On the mechanism of use of means directed to funding of nationwide investment projects”, presented on August 4, and “On the forecast of the socio-economic development of the Russian Federation for 2006 and key parameters of the forecast socio-economic development of the Russian Federation for a period till 2008”, considered at the session of August 18.
* * * The August 4 report of Gref “ On the mechanism of use of means directed to funding of nationwide investment projects”, concerned formation of an investment fund in the RF, which, according to the Ministry of Economic Development and Trade of Russia, contains allocations provided for in the federal budget for purposes of investment projects’ implementation. It is suggested that the source of its financing will be formed out of the federal budget revenues, that form the RF Stabilization Fund from an increase of oil reference price according to Item 96.1 of the RF Budget Code, as per USD 1 a barrel, and also from the interest payments’ savings in early repayment of the foreign national debt. It is pointed out herewith that according to the Financial Projections, adopted at the session of the RF, the volume of means directed to formation of the fund will constitute in 2006 Rb 69.7 bn, in 2007 - Rb 72.9 bn, and in 2008 – Rb 73.2 bn.
It is assumed that the means of the investment fund will be used for the government support of investment projects in three areas: creation and (or) development of nationwide infrastructure, creation and (or) development of elements of national innovation system, securing realization of institutional reform.
As the forms of state support were suggested co-financing of investment project, on contract terms, with formalization of the RF property rights, sending means to authorized capitals of legal entities, granting state guarantees for investment projects.
On the session of August 18 the minister of economic development and trade Gref G.O. presented a report “On the forecast of the socio-economic development of the Russian Federation for 2006 and key parameters of the forecast socio-economic development of the Russian Federation for a period till 2008”.
Basing on the report data, the development of the forecast of the socio-economic development and the forecast parameters for a period till 2008 was carried out proceeding from the following variants:
I (inertial) variant suggests maintenance of inertial dynamics of development, absence of structural changes in economy accounts a possibility of sharp worsening of the state of affairs on the international markets of energy resources. In comparison with 2004, GDP will increase during 2005-2008 by 20%.
II variant (basic for forming the draft federal budget for 2006 and financial projections for 2008) provides maintenance of favorable state of affairs on the foreign market, and also strengthening of the innovation component of economic growth based on implementation of a package of institutional transformations and the strategy of development of the key sectors of economy. For stimulation of the economic growth it is provided a package of measures for reduction of tax burden on business and an increase of the level of investment expenditures of the federal budget and investment fund. An increase of GDP for a period of 2005- 2008 will be 25,8% to the level of 2004.
II variant provides the following trends: increase in the share of gross capital formation of GDP, strengthening of the investment component of economic growth, increase of the share of domestic producers in the structure of growth of domestic demand, economy adaptation to ruble strengthening, increase in the share of processing branches in the structure of production, maintenance of advanced growth of personal income in comparison with the dynamics of production, dynamic growth of consumer demand. The following problems will hinder the development of economy: capital flight and high dependence of financial system and production on the state of affairs on the foreign market, maintenance of technological backwardness.
External conditions of development - Euro-to-US dollar rate dynamics. According to the report data, most probable that the US dollar will stop soon be strengthening and a relatively stable euro-to-US dollar rate (EUR/USD 1.2-1.24) be achieved.
- Oil prices. Taking into account a number of factors, the tendency to reduction of oil prices (from 48 to 47 doll./barrel by the end of 2005, and to 39-40 doll./barrel in the future) seems like a probable scenario.
- Prices for metals. Basing on the report data, in 2005 rise in prices for ferrous metals will make on average 22,7% (in 2006 it is expected 9the reduction of about 15%). In the long term the prices for aluminum will remain high. The prospects of development of the world’s copper market are estimated in 2005-2008 as satisfactory.
Changes in the dynamics of oil and gas production and export Following the results of 2005, the growth of production is expected by 2,5-3,3% - to 470-474 million tons. In 2006 the oil production is estimated at a level of 487 million tons, and in 2007-2008 an incremental growth of p-ro9duction will achieve about 1,6% per year. The oil export in 2005 is estimated at 263-269 million tons, in 2008 it will reach 287-292 million tons. In 2006 the growth rates of gas production are forecasted at a level of 102,2-102,7% to 2004, while in 2008 - 105,5-106,5% to 2004. Gas export will grow from 203 billion cubic meters in 2005 to 250-256 bcm in 2008.
Domestic conditions of development - Demographic situation. In the medium-term perspective it is expected to retain the tendency of lowering the average annual number of resident population, decreasing annually by 0,6 million people.
In 2006 the able-bodied population 0will decrease by 30 thou. people, in 2007 - by 370 thou. people, in 2008 - by 646 thou. people. Because of progressive aging of Russia’s population additional government financial expenditures will be needed for the performance of public obligations. Migration of population to the country shows a stable and positive dynamics and, to a certain extent, stabilizes the population size of Russia.
- Lowering the inflation rate. The inflation rate is lowered from 11% in 2005 to 7-8,5% in 2006, and to 4-5,5% in 2008.
- The level of prices (tariffs) for goods (services) of natural monopolies. The rates of price increase for basic goods and services of natural monopolies should not exceed in 2006-2008 the targeted rate of inflation set for relevant years.
- Balance of payment and dynamics of exchange rate. In accordance with the report data, an increase of foreign exchange reserves will make in 2005 USD 59-61 billion, in lowering of decrease in 2006 to USD 53-55 and in 2008 - to USD 17-21 billion. In 2008 the Russia’s foreign exchange reserves may constitute USD 277-280 billion. The balance of payment will allow also in the future to make advance payments for еру redemption of public debt without serious consequences. It is assumed that Bank of Russia Банк will pursue a policy aimed at restraint of strengthening the ruble rate in achieving the targeted inflation rates. After the expected strengthening of the real effective ruble rate in 2005 by 9-10%, in 2006 its growth rates will be lowered, in real terms, to 4,2%, and in 20072008 will not exceed 3-3,7% per year.
- Decreasing power intensity of production. It is expected further decreasing the power intensity of GDP: over 2006-2008 it will make 11,5-13,8% to the level of 2004.
- Reforming the taxation system. The forecast accounts the guidelines of the taxation policy on improvement of tax laws and tax administration, including: perfecting the procedures of collection of the corporate profit tax and VAT, abolishing, since 2006, inheritance tax, perfecting excise policy and raising the rate of the tax on extraction of mineral resources for gas, improvement of small business taxation, establishing characteristic properties in administrative regime, land-utilization and taxation, customs benefits for persons working in the territories of special economic zones (SEZ).
- Customs and tariff policy. In this field the report highlights major lines of activity, such as liberalization import rate liberalization import rate or goods which are not produced in Russia or are produced in insufficient quantity or are of inadequate quality, and which are necessary for lowering general business costs, abolition of export duties –for production with high degree of processing, expanding the forms of state support of export of Russian goods and services, that are not in conflict with the terms of Russia’s WTO accession, etc.
Contribution of the factors of economic policy and improvements of the investment climate into economic growth In 2005 the share of the external price factor in the increase of GDP is left at a level of previous year. The dynamics of the world’s oil prices means for the economy of Russia introducing into such a phase where fur8ther growth of oil prices does not cause an additional increase of GDP. The lowering trend of the economy growth rates in decreasing of the share of foreign economic factor may lead in 2006 to lessening of the growth rates to 4-5%. In 2007-2008, in absence of intensification of the domestic factors of development and under conditions of lowering the world prices the economy growth rates may drop to 4,3-4,6%. In the medium-term sensitivity of the Russian economy to growth of oil prices, especially above the level of USD 30-35 a barrel, considerably weakens.
In such a situation, major driving force of the economic growth becomes intensification of the domestic factors of growth, primarily innovative-investment component. The contribution of increasing of government investment expenditures to growth of GDP is estimated at a level of 0,3% of percentage point in 2006, with the following rising to 0,5% of percentage point by 2008. Introducing since 2006 a package of tax novations will allow to add to the growth of GDP about 0,2% of percentage point in 2006 and 0,1-0,2% of percentage in 2007-2008. Introducing private investments into the growth of the economy remains stable and is estimated at 2 percentage points of increase of GDP.
A Review of the Russian economic laws issued in August In August 2005, amendments were made to Chapters 26.2 “Simplified System of Taxation”, Chapter 26.3 “The System of Taxation as a Unified Tax on Imputed Income for Certain Categories of Activity”, Chapter 22 “Excises”, Chapter 26 “Mineral Tax”, and Chapter 21 “Value Added Tax” of the second part of the RF Tax Code; Federal Law “On Concession Agreements” was adopted; social laws were also amended, in particular, monthly cash payments for the Awardees of the Heroes of the Soviet Union and Heroes of the Russian Federation Medals and the Holders of a complete set of the Medal of Honor was introduced; federal standards of apartment rent and payment for public utility services in the Russian Federation and the constituent entities of the Russian Federation were introduced; the data (as of July 2005 ) for calculation of the mineral tax in oil production industry were provided.
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