Prime Minister Vladimir Putin presented a revised budget on Thursday that diverted funds from key areas like agriculture and the police to support social programs and pensions.
The new budget, which includes a raft of anti-crisis measures, will be debated across the country for 10 days before being sent to the State Duma for approval.
The state will spend 9.7 trillion rubles ($291 billion) under the revised budget, including 1.6 trillion rubles in an anti-crisis package. The total spending represents an increase of 667 billion rubles, or 7.4 percent, from the original 2009 budget approved last June.
Revenues will total 6.7 trillion rubles for a budget deficit of 3 trillion rubles, or 7.4 percent. The deficit is Russia's first in a decade.
The revised budget is based on an oil price of $41 per barrel and inflation of about 13 percent. The previous budget was calculated on an oil price of $95 per barrel.
The economy will likely run a deficit for the next several years, Putin said.
He called for "conservative budget strategies and ... trust toward the financial system" to tackle the crisis and said the country should rely on taxes rather than oil money to lead it out of the downturn.
"There's no point hoping for high oil revenues in the near future that would solve all of our problems at once," Putin said.
Putin ruled out printing money as a means of covering the deficit, saying that would be "unreasonable and even dangerous."
"If we print more than we produce, the result would be obvious to any economist -- inflation," he said.
The prime minister said the deficit would be covered by "reserves that have accumulated in recent years or, if necessary, borrowing under market conditions."
The country has no immediate need to borrow and will not seek loans abroad, he said.
The spending plan will not affect the financing of key demographic, educational, health, pension and innovational development programs, Putin said.
"Those are our priorities, and we are not going to revise them," he said.
Any attempt by businesses to "go into the shadows" when it comes to paying taxes should be suppressed "in the most serious way," Putin said. However, he also warned tax and customs officials to avoid "terrorizing" businesses.
The government's anti-crisis plan is based on seven points: increasing social welfare, maintaining industrial capacity, boosting domestic demand, promoting small business, tackling corruption, backing the financial system and laying the groundwork for long-term development.
Subordinated loans of 200 billion rubles and 130 billion rubles will be given to state-run banks VTB and the Vneshekonombank, respectively, and another 225 billion rubles ($6.8 billion) will go to commercial banks.
The plan sees the government spending 2.75 trillion rubles from its Reserve Fund this year, while the National Welfare Fund, which swelled to 2.99 trillion rubles in February, will drop to 2 percent of gross domestic product by the end of 2011.
Ineffective companies will be allowed to go bankrupt, and the state will make the necessary efforts to minimize the economic effects of bankruptcy on workers and their communities and preserve their strategic assets.
The plan named 295 companies that are key to the Russian economy.
In response to a question from a Moscow Times reporter, Finance Minister Alexei Kudrin said companies that are on that list could be allowed to fail as well.
The new budget revised the budgets of nearly every department in the government, with some seeing severe cuts and others getting their coffers filled.
The biggest losers were the police and security services, whose 2009 budgets saw cuts of more than 95 percent on spending that was intended on bringing their training and equipment up to date. Agriculture spending was cut by 15.3 percent. Spending for road maintenance, culture, economic and defense research also took significant cuts.
An Industry and Energy Ministry official said that despite cuts of up to 20 percent to various programs under its domain, most of its key projects for 2009 were still in place.
Social programs saw big gains, with allocations shooting up by almost 150 percent to 212 billion rubles. The budget for transportation rose by 19 percent, and allocations for television and radio grew by 40 percent to 200 million rubles.
Government officials said citizens could voice their opinions of the plan by leaving a message on the Cabinet web site. No other options for debate or discussion were named.
The new budget, which includes a raft of anti-crisis measures, will be debated across the country for 10 days before being sent to the State Duma for approval.
The state will spend 9.7 trillion rubles ($291 billion) under the revised budget, including 1.6 trillion rubles in an anti-crisis package. The total spending represents an increase of 667 billion rubles, or 7.4 percent, from the original 2009 budget approved last June.
Revenues will total 6.7 trillion rubles for a budget deficit of 3 trillion rubles, or 7.4 percent. The deficit is Russia's first in a decade.
The revised budget is based on an oil price of $41 per barrel and inflation of about 13 percent. The previous budget was calculated on an oil price of $95 per barrel.
The economy will likely run a deficit for the next several years, Putin said.
He called for "conservative budget strategies and ... trust toward the financial system" to tackle the crisis and said the country should rely on taxes rather than oil money to lead it out of the downturn.
"There's no point hoping for high oil revenues in the near future that would solve all of our problems at once," Putin said.
Putin ruled out printing money as a means of covering the deficit, saying that would be "unreasonable and even dangerous."
"If we print more than we produce, the result would be obvious to any economist -- inflation," he said.
The prime minister said the deficit would be covered by "reserves that have accumulated in recent years or, if necessary, borrowing under market conditions."
The country has no immediate need to borrow and will not seek loans abroad, he said.
The spending plan will not affect the financing of key demographic, educational, health, pension and innovational development programs, Putin said.
"Those are our priorities, and we are not going to revise them," he said.
Any attempt by businesses to "go into the shadows" when it comes to paying taxes should be suppressed "in the most serious way," Putin said. However, he also warned tax and customs officials to avoid "terrorizing" businesses.
The government's anti-crisis plan is based on seven points: increasing social welfare, maintaining industrial capacity, boosting domestic demand, promoting small business, tackling corruption, backing the financial system and laying the groundwork for long-term development.
Subordinated loans of 200 billion rubles and 130 billion rubles will be given to state-run banks VTB and the Vneshekonombank, respectively, and another 225 billion rubles ($6.8 billion) will go to commercial banks.
The plan sees the government spending 2.75 trillion rubles from its Reserve Fund this year, while the National Welfare Fund, which swelled to 2.99 trillion rubles in February, will drop to 2 percent of gross domestic product by the end of 2011.
Ineffective companies will be allowed to go bankrupt, and the state will make the necessary efforts to minimize the economic effects of bankruptcy on workers and their communities and preserve their strategic assets.
The plan named 295 companies that are key to the Russian economy.
In response to a question from a Moscow Times reporter, Finance Minister Alexei Kudrin said companies that are on that list could be allowed to fail as well.
The new budget revised the budgets of nearly every department in the government, with some seeing severe cuts and others getting their coffers filled.
The biggest losers were the police and security services, whose 2009 budgets saw cuts of more than 95 percent on spending that was intended on bringing their training and equipment up to date. Agriculture spending was cut by 15.3 percent. Spending for road maintenance, culture, economic and defense research also took significant cuts.
An Industry and Energy Ministry official said that despite cuts of up to 20 percent to various programs under its domain, most of its key projects for 2009 were still in place.
Social programs saw big gains, with allocations shooting up by almost 150 percent to 212 billion rubles. The budget for transportation rose by 19 percent, and allocations for television and radio grew by 40 percent to 200 million rubles.
Government officials said citizens could voice their opinions of the plan by leaving a message on the Cabinet web site. No other options for debate or discussion were named.
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