Russian Duma Approves 2010 Budget

by Tatiana Smolenska, Tax-News.com, Moscow

23 October 2009

Russia’s parliament, the Duma, has passed the first reading of the 2010 federal budget against the vociferous protest of the three parties in opposition to the United Russia government.

The Russian finance minister, Alexei Kudrin, has revised the government forecasts for 2009 budget revenues, which will be down 25% on 2008, whilst spending will be up 31%. The deficits will be bridged primarily from the Reserve Fund and National Welfare Fund, and also with borrowings. The Reserve Fund will be fully depleted in 2010, but it is expected that payments in will resume in 2013.

The 2010 budget foresees a deficit of 6.8% of GDP, or RUB2,937bn (USD100bn), based on revenues of RUB6,950bn (USD238bn), and spending at RUB9,886bn (USD338bn). The budget calculations were based on a USD 58 price per barrel for Urals crude. After 2010 the government projects a progressively reduced deficit, 4% of GDP in 2011 and 3% in 2012.

Kudrin stated in Parliament that Russia was already out of recession technically and could expect 1.6% growth of GDP in 2010 and inflation below 10%. He also stated that his priority was to raise pensions by 46% and support high tech industry growth.

Communist Party Chairman, Gennady Zyuganov, in opposition, urged the government to increase taxes, especially on vodka and tobacco, arguing again for a progressive income tax instead of the present flat 13%.

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