The latest proposal from the Finance Ministry calls for federal spending to increase 10.5 percent next year over this year's amount, a senior government official said Wednesday.
Next year's budget, which the Cabinet will consider Thursday, foresees spending 12.2 trillion rubles ($435 billion), the official said on customary condition of anonymity for pre-Cabinet briefings.
The Cabinet's decision on spending, revenue and the deficit on Thursday will bring to a close the initial phase of government budget discussions. From that moment on, ministries will begin adjusting their plans.
The Finance Ministry is projecting the deficit to equal 2.7 percent of gross domestic product next year, a seemingly positive drop compared with its previous long-term goal of 3.1 percent.
The reduction comes even as the government plans new expenditures next year — like salary increases for military personnel — even though it is set to lose money after reducing the payroll taxes.
But the smaller deficit stems from a "technicality" — the increase of the oil price that underpins budget revenues, said Renaissance Capital economist Anton Nikitin. The government is basing its 2012 budget on a riskier price of $93 per barrel of Urals crude, the country's main export blend.
Tax revenues from the oil and natural gas industry comprise half of what the government takes in. The most recent official long-term budget deficit forecast, which came out last year, was based on oil at $78 per barrel in 2012.
A Message from The Moscow Times:
Dear readers,
We are facing unprecedented challenges. Russia's Prosecutor General's Office has designated The Moscow Times as an "undesirable" organization, criminalizing our work and putting our staff at risk of prosecution. This follows our earlier unjust labeling as a "foreign agent."
These actions are direct attempts to silence independent journalism in Russia. The authorities claim our work "discredits the decisions of the Russian leadership." We see things differently: we strive to provide accurate, unbiased reporting on Russia.
We, the journalists of The Moscow Times, refuse to be silenced. But to continue our work, we need your help.
Your support, no matter how small, makes a world of difference. If you can, please support us monthly starting from just $2. It's quick to set up, and every contribution makes a significant impact.
By supporting The Moscow Times, you're defending open, independent journalism in the face of repression. Thank you for standing with us.
Remind me later.
