In late February, the first congress of “Fair Russia” took place so as to summarize the results of the first four months of its political life. In his report, Mironov promised to protect the working people, to “struggle against big capital”, and to “…profess socialist ideas only”. In fact, by having presented such a platform, “Fair Russia” must now fully shift itself onto the electoral field of the Communist Party of the Russian Federation, where not everybody will be ready to support the newly – fledged party of the self – styled “oppositionist” and Putin’s protg (not to mention the fact that the electoral field of the CPRF is rather limited and has a considerable anti – rating). Thus, it seems that Mironov’s party is slightly too reckless with regard to the use of classical slogans, and tends to ignore the complexity of their perception by the electorate, as well as the fact that the latter had mainly hoped that “Fair Russia” would become a serious opponent of “United Russia” on a number of issues, including that of democratic rights. However, it will be not too late for an organization like “Fair Russia” to introduce certain changes in its modus operandi once the elections in March are over.
In February, the head of the Joint – Stock Company “Alros” was replaced. Instead of the former President, A. Nechiporuk, who was believed to be A. Kudrin’s protg’, the company will be headed by S. Vybornov, a newcomer from “Interros”. Formally, Nechiporuk had fulfilled the President’s assignment and had restored the state – owned controlling block of shares in “Alros” (the Republic of Yakutia has about 40 %, if the 8 % owned by the uluses are taken into account). However, the implementation of this assignment took a very long time and, more importantly, resulted in large expenses on buying – out, from private owners, more that 10 % of shares. The former managers of the company supported by President of Yakutia V. Shtyrov, and maybe somebody in the higher echelons of power, did manage to block any attempts to withdraw stocks from the Republic’s share by one way or another. Also, the conflict between the republican authorities, who had been skilful enough to organize strong public support for their cause, and A. Nechiporuk became too acute. To make the matters worse, Nechiporuk has failed to resolve the dispute with the European Commission, which wants to forbid “Alros” to supply De Beers with raw material, starting from the year 2009. It is very likely that this appointment will become a certain step in the formation, on the market of non – ferrous metals, of the afore – mentioned future amalgamation of the private “Noril’skii Nikel” and the state – owned “Alros”.
S. Zhavoronkov Budget and tax policies According to the preliminary results of the budget’s execution in January 2007, the revenue level of the RF federal budget amounted to 21.92 % of GDP, the expenditure level of the RF federal budget - to 11.21 % of GDP, while budget surplus was 10.7 % of GDP. By the results of the year 2006, the revenues of the RF consolidated budget amounted to 35,5 % of GDP, consolidated budget expenditures – to 27.8 % of GDP, and budget surplus – to 7.7 % of GDP. As of 1 February 2007, the amount of the RF Stabilization Fund was 2, 647.2 billion roubles, as compared to 2, 346.92 billion roubles as of 1 January 2007, which against annual GDP and accumulated GDP in January through December 2006 constitutes 11.1 % of GDP and 8.8 % of GDP, respectively.
The status of the state budget Table 1 displays the dynamics of the main parameters of the RF federal budget in 2004 – 2007. In accordance with the preliminary estimates made by the RF Ministry of Finance concerning the budget’s execution in cash terms in January 2007, the federal budget was executed in respect to its revenues in the amount of 436.9 billion roubles (or 21.9 % of GDP), and in respect to its expenditures - in the amount of 223.5 billion roubles (or 11.2 % of GDP). Federal budget surplus amounted to 213.3 billion roubles (or 10.7 % of GDP).
Both in absolute terms and as a percentage of GDP, the federal budget revenues in January of this year were found to be less than the corresponding index of last year (449.35 billion roubles, or 28.1% of GDP).
The federal budget expenditure in January 2007 was also somewhat lower than the corresponding index of 2006 (227.7 billion roubles, or 14.2 % of GDP). The simultaneously reduced revenue and expenditure of the At present, for a person to be appointed senator, it is necessary that Mironov put the issue to the vote (which he frequently fails to do), and for a senator to be removed from office - Mironov’s presentation of the case is required. In fact, the region itself cannot appoint its own representative, which is absurd in a setting of a federal state.
federal budget resulted in a slight decrease of the budget surplus in absolute terms, and in a substantial fall, if it is to be expressed as a percentage of GDP, against the corresponding indices of last year (221.7 billion roubles in 2006, or 13.9 % of GDP).
If one compares the dynamics of the federal budget revenue and expenditure in January of this year and in the corresponding months of previous years, it can be seen that revenue became slightly higher than in 2004, while revenue went down to its historic low during the whole period under consideration.
The structure of revenues in the period under consideration is shown in Table 2.
The main parameters of the RF federal budget (in % of GDP) 2004 2005 Jan 2006 2006 Jan Revenue 20.1 % 23.7 % 28.1% 23.5 % 21.9 % Expenditure 15.8 % 16.2 % 14.2 % 16.2 % 11.2 % Deficit (–)/ Surplus (+) 4.3 % 7.5 % 13.9 % 7.4 % 10.7 % Table 2.
The RF federal budget revenues (in % of GDP, budget execution in cash terms) 2005 ÿíâ. 2006 2006 ÿíâ. Taxes and other payments administered by Federal 12.15.92 % 11.27 % 11.17 % Tax Service % Taxes and other payments administered by Federal 9.73 % 10.73 % 10.76 % 9.72 % Customs Service Revenues administered by Federal Agency for Man0.27 % 0.35 % 0.26 % 0.13 % agement of State Property Revenues of federal budget administered by other 1.35 % 1.08 % 1.25 % 0.90 % federal bodies Total revenues 23.7% 28.08% 23.54% 21.9% As can be seen in this table, the structure of tax revenues and other types of revenue, by department, in January 2007 did not change, as compared to the previous periods. However, in relation to GDP, tax revenues and payments became markedly lower. Thus, in January of the current year the main bulk of revenues was constituted by the taxes and other payments administered by the Federal Tax Service – 11.17 % of GDP against 15.95 % of GDP in 2005.It is this substantial fall in tax collection that became one of the key reasons for the reduced aggregate revenue of the federal budget. The collected amount of the taxes and other payments administered by the Federal Tax Service constituted 9.72 % of GDP, which is by nearly 1 p. p. lower than the same index registered in January 2006. The volume of revenues administered by the Federal Agency for the Management of State Property in January 2007 became nearly three times lower and amounted to 0.13 % of GDP. And finally, the volume of the federal budget revenues administered by other federal bodies, by the results of the first month of 2007 was seen to have also become somewhat lower than last year’s indices (1.08 % of GDP), and amounted to 0.90 % of GDP.
The preliminary data on the financing of federal budget expenditures in January 2007, submitted by the RF Ministry of Finance, are presented in Table 3.
The volumes of financing of the RF federal budget expenditures (in % of GDP) 2005 Jan 2006 2006 Jan General state issues 2.58% 7.80% 2.19% 5.82% of these, servicing of state and municipal debts 1.06% 4.22% 0.65% 2.47% National defense 2.71% 4.67% 2.57% 4.91% National security and law-enforcement activity 2.05% 6.29% 2.08% 6.43% National economy 1.17% 0.90% 1.31% 1.30% Housing and utilities system 0.04% 0.01% 0.20% 0.03% Environment protection 0.02% 0.06% 0.03% 0.07% Education 0.73% 1.36% 0.78% 1.82% Culture, cinematography and mass media 0.22% 0.33% 0.21% 0.22% Public health care and sports 0.42% 1.33% 0.56% 1.26% Social policy 0.88% 2.95% 0.81% 2.08% Interbudgetary transfers 5.77% 20.04% 5.68% 14.99% Total expenditures 16.58% 45.74% 16.40% 38.93% One can notice rather substantial fluctuations of the aggregate value of financed expenditures depending on a period under consideration. Thus, while as of the end of 2006 it was approximately 16.4 % of GDP, in January it went up to 38.9 % of GDP. At the same time, against last year’s index, financed expenditures became somewhat lower (45.7 % of GDP in January 2006).
The rise in expenditures, as shown by the final indices of the year 2006, can be explained by their growth under many items of expenditure in the federal budget. The greatest growth rate was displayed by sections “General State Isues” (from 2.91 % to 5.82 % of GDP), largely due to increased cost of government debt servicing (from 0.65 % to 2.47 % of GDP), “National Defense” (from 2.57 % to 4.91 %), “National Security and Law-Enforcement Activity” (from 2.08 % to 6.43 % of GDP), “Education” (from 0.78 % toî 1.82 % of GDP), and “Interbudgetary Transfers” (from 5.68 % to 14.99 % of GDP).
However, if one analyses the changes that occurred as compared with January 2006, expenditures were increased under some sections, while other sections demonstrated decreased values. Thus, growth was seen under sections (from 4.67 % to 4.91 % of GDP), “National Security and Law-Enforcement Activity” (from 6.29 % to 6.43 % of GDP), “National Economy” (from 0.90 % to 1.30 % of GDP), “Education” (from 1.% to 1.82 % of GDP). On the contrary, expenditures became lower under the section “General State Issues” - from 7.8 % to 5.8 % of GDP, under the section “Public health care and sports” – from 1.33 % to 1.26 % of GDP, “Social Policy” – from 2.95 % to 2.08 % of GDP, and “Interbudgetary Transfers” - from 20.04 % to 14.99 % of GDP. The expenditures under other items of expenditure were negligible.
The execution of the RF consolidated federal budget in January – November 2006 (in % of GDP) I II III IV V VI VII VIII IX X XI XII Taxes* 25.6% 24.4% 25.6% 27.4% 27.1% 26.0% 26.1% 25.7%25.0% 25.0% 25.1% 25.2% Revenues 32.0% 30.3% 31.5% 33.4% 33.6% 32.2% 32.2% 31.6%30.9% 30.8% 30.7% 31.1% Expenditures 20.7% 25.3% 27.7% 28.8% 28.8% 28.6% 28.7% 28.5%28.2% 27.8% 27.9% 29.7% Deficit / 11.3% 5.0% 3.8% 4.5% 4.7% 3.5% 3.6% 3.1% 2.7% 3.0% 2.8% 1.4% Surplus I II III IV V VI VII VIII IX X XI XII Taxes* 6.1% 21.8% 27.4% 27.4% 26.6% 27.2% 27.1% 26.4% 26.5% 26.9% 26.8% Revenues 30.6% 28.2% 29.8% 32.9% 32.9% 32.5% 33.1% 32.9% 31.9% 32.0% 32.3% 32.3% Expenditures 18.5% 22.8% 25.4% 27.3% 26.9% 27.0% 27.0% 26.9% 26.0% 25.9% 26.1% 27.8% Deficit / 12.1% 5.4% 4.4% 5.6% 6.0% 5.5% 6.1% 6.0% 5.9% 6.1% 6.2% 4.5% Surplus I II III IV V VI VII VIII IX X XI XII Revenues 48.8% 40.3% 40.3% 40.8% 38.8% 38.2% 37.6% 37.0% 36.0% 35.9% 35.8% 36.1% Expenditures 22.2% 23.3% 24.9% 27.1% 26.5% 26.6% 26.7% 26.6% 27.2% 26.1% 25.9% 28.1% Deficit / 10.0% 26.5% 17.0% 15.4% 13.7% 12.3% 11.6% 11.0% 10.5% 8.8% 9.8% 7.9% Surplus I II III IV V VI VII VIII IX X XI XII Revenues 36.2% 34.4% 37.9% 37.1% 37.2% 36.8% 36.6% 36.5% 35.4% 35.1% 34.8% 35.5% Expenditures 17.6% 21.0% 24.2% 25.4% 24.7% 25.5% 25.3% 25.1% 24.8% 24.7% 25.1% 27.8% Deficit / 18.7% 13.4% 13.6% 11.7% 12.5% 11.3% 11.3% 11.4% 10.6% 10.4% 10.7% 7.7% Surplus *without the single social tax Judging by the results of 2006, the RF consolidated budget revenue amounted to 35.5 % of GDP, as compared to 36.1 % of GDP in 2005. The consolidated budget expenditure also decreased, as compared to the similar index of 2005, and amounted to 27.8 % of GDP (28.1 % of GDP in 2005). The consolidated budget surplus in 2006 was 7.7 % of GDP, or somewhat lower than the index of 2005 (7.9 %). Thus, as seen by the results of the year 2006, both the revenue and expenditure of the RF consolidated budget was reduced, in % of GDP, against the corresponding indices of 2005, resulting from which the RF consolidated budget surplus also became lower. Besides, in February the Federal Treasury published the information concerning the execution of the RF general government’s budget for the year 2006. According to this information, the revenue of the general government, by last year’s results, amounted to 40.0 % of GDP (39.7 % of GDP in 2005), the expenditure – to 31.6 % of GDP (31.5 % of GDP in 2005), while budget surplus grew from 8.1 % in 2005 to 8.5% of GDP by the results of 2006. Thus, the indices in the general government’s budget in 2006 displayed only alight changes against those of 2005.
As of 1 February 2007, the amount of the RF Stabilization Fund was equal to 2, 647.2 billion roubles, as compared to 2,346.92 billion roubles as of 1 January 2007, which against annual GDP and accumulated GDP in January through December 2006 constitutes 11.1 % of GDP and 8.8 % of GDP, respectively.
The main developments in the budget sphere In February, the draft of the new RF Budget Code was submitted to the RF State Duma, which, after its enactment, will make it possible to switch over to three-year budget planning. Thereby the former practices of budget recipients using their funds at the end of a calendar year will be eliminated, and they will be able to plan their activities for a medium term. In this connection, Deputy RF Minister of Finance T. Golikova offered comments concerning several issues related to the budget for 2008 – 2010. Thus, according to her, the RF federal budget expenditure in 2010 will grow by 2.7 trillion roubles on the year 2007, which both in nominal and real terms will amount to 50 % and 23 %, respectively. The forecast takes into account the reserved 5 % of expenditure, which, as the Ministry of Finance suggests, should be preserved for the years 2009 and 2010, instead of being allocated. It was also noted that the three-year budget should take into account all the existing government liabilities, including some 165 billion roubles of liabilities against the payment of parent capital. Besides, the three-year budget incorporates the allocations to the provision of housing to the military in the amount of 20 billion roubles in 2008, more than 46 20 billion roubles in 2009, and more than 20 billion roubles - in 2010. According to the Deputy Minister, the volume of GDP by will grow by 7.6 times on the year 1999, in nominal terms.