30 Nov 2010 15:41

Russia could have 3.5%-4% budget deficit in 2010 - Klepach

LONDON. Nov 30 (Interfax) - Russia could have a budget deficit of 3.5%-4% of GDP in 2010, Deputy Economic Development Minister Andrei Klepach said at a banking forum in London.

"Our deficit estimate was 3.8% of GDP, or 5% at most. Now I think we'll have 3.5% or 4% at most," Klepach said.

He said the deficit forecast had improved due to higher budget revenue, and not just from the oil and gas industry as the result of raising forecast oil prices to $77.5 - $78 a barrel from $75."The key development has been in non-oil-and-gas revenue," he said.

Also, spending will be 400 billion-500 billion rubles less than planned. "A considerable amount will be unspent and returned to the budget," Klepach said.

Deputy Prime Minister Alexei Kudrin, who is also the country's finance minister, Tuesday also lowered the forecast deficit from the 4.6% that he aired last week to 4.3% of GDP.

The country is living with a deficit "which so far exceeds the necessary, normal deficit, but we'll have to reduce it in the next few years and that won't be a serious burden; we'll have to redistribute spending," Kudrin said.

"We'll have to form a post-crisis, stable economy with a lower deficit," he said.

Also, Kudrin said that allocating more funds for social purposes, support for children and maternity benefits "will of course reduce our spending on other areas," he said.

Kudrin commented on the defense spending that Russian President Dmitry Medvedev spoke about in his State of the Nation Address.

"A figure of 20 trillion rubles in additional spending over the next decade to strengthen our defense capability was mentioned. This is probably not additional but total spending over the next decade," Kudrin said.

"This task will, of course, require additional thought from the point of view of financial sources, and I think it will be an additional burden on the economy," Kudrin said.

"Despite this, the president thinks this is necessary for our country," he said.