27 Aug 2010 14:01

Finance Ministry: more caution needed on long-term spending commitments

MOSCOW. Aug 27 (Interfax) - The Russian government must rely less on budget revenue associated with commodity exports and more on domestically generated budget revenue when taking on long-term commitments, particularly social spending commitments, Deputy Finance Minister Tatyana Nesterenko said.

"The year 2009 could be used as a textbook that explains what a long-term, stable budget system looks like," Nesterenko said at an Audit Chamber meeting that examined the chamber's conclusions concerning budget implementation in 2009.

Nesterenko recalled that the 2009 budget was part of a three-year budget approved in 2007. "We first saw the 2009 budget on June 24, 2007," she said, noting that at that time GDP in 2009 was expected to total 39 trillion rubles with oil priced at $52 a barrel. Those assumptions produced a budget revenue projection of 7.465 trillion rubles, which was used as the basis for determining spending items.

"We felt the goal was to ensure implementation of these commitments and to be very cautious about accepting new ones," Nesterenko said.

However, as oil prices climbed to $129 a barrel in 2008, the budget revenue projection for 2009 rose to 8.5 trillion rubles, then to 9.5 trillion rubles and finally to 10.9 trillion rubles.

However, actual revenue was much lower, and actual spending amounted to 7.4 trillion rubles, the amount originally envisioned in 2007.

"However, this year, when revenue is 3 trillion rubles above target, we have already managed to take on so many commitments, including pension and social spending commitments, that it will be very difficult to discontinue them in future," she said.

"The goal of long-term budget planning, caution in taking on new commitments and minimizing the impact on those commitments of revenue associated with the global market situation, this is a lesson to look at and think about: is it really possible that someone would repeat those decisions after what has happened?" she said.