Law on the Federal Budget for 2011–2013 is approved

The budget’s parameters have been calculated on the basis of a moderately optimistic forecast of the main macroeconomic indices of the national economy’s socio-economic development: the price of oil (Urals) by 2013 will become 79 USD/barrel against the level of 75 USD/barrel expected in 2011; the level of inflation is expected to be within 7–5.5% in the period of 2011–2013; economic growth, by 2013, will amount to 4.5%.

It is envisaged that throughout the entire medium-term period the federal budget will be executed with a deficit, whose level will continue to display its current downward trend – it is going to drop to 2.9% of GDP in 2013 against 3.6% of GDP in 2011. However, no significant decline in the level of deficit unrelated to oil and gas can be expected in the medium term, it will never drop below 10% of GDP. A declining deficit will be largely the result of a fall in budget expenditures in relative terms. Thus, the volume of federal budget expenditure by 2013 will drop on 2011 by 1.5 p.p. of GDP, whereas the volume of revenue will accordingly dwindle by 0.8 p.p. of GDP.

The main priorities in the structure of federal budget expenditure will be the social sphere and government allocations to the modernization of the national economy. Besides, some considerable expenditures will be earmarked to the army’s rearmament. A total of approximately 20 trillion Rb will be thus allocated over a period of 10 years, but the 2011–2013 budget contains no explicit allocations earmarked to the funding of that program.
In the next few years, some reforms will be implemented in the sphere of public health care. Besides, impressive budget allocations will be required in order to support the RF Pension Fund in view of the forthcoming indexation of pensions by 8% (from 1 February 2011) and increased social benefits. Thus, in 2011 a total of 2.3 trillion Rb will be allocated to those items, and by 2013 the volume of related expenditures will amount to 2.8 trillion Rb.
Federal budget deficit for 2011 is established in the amount of 1,814.0 bn Rb; in 2012 – 1,734.5 bn Rb; and in 2013 – 1,795.7 bn Rb.

The ceiling established for the Russian Federation’s domestic government debt will amount to 6,976.4 bn Rb as of 1 January 2013, and to 8,826.2 bn Rb as of 1 January 2014; the ceiling for the Russian Federation’s government foreign debt as of 1 January 2013 will reach the level of 65.2 bn USD, or 52.1 bn euro; and as of 1 January 2014 – 75.6 bn USD, or 58.2 bn euro.

It is intended that in 2011 the federal budget deficit will be covered by funding from the Reserve Fund (284.4 bn Rb), the National Welfare Fund (5 bn Rb), and some other sources (1, 524.6 bn Rb). These will be the proceeds from privatization of federal property and the government’s borrowings. It should be noted that as the bulk of the resources accumulated in the Reserve Fund was spent on covering the 2009 federal budget deficit, and the oil and gas revenues in the federal budget were earmarked in full to covering the expenditure (or oil and gas deficit), no funding will be allocated to the Reserve Fund and the National Welfare Fund in 2010–2013. In this connection, the size of the Reserve Fund by 2012 will amount to 47.1 bn Rb.

E.G. Fomina – Research Fellow of the Budget Policy Department;
M.P. Goldin – Analyst Lawyer, the Appraisal and Development of Normative-Legal Acts (Bills) Department