MOSCOW, July 30 (RIA Novosti) - The Russian government has approved the main parameters of the federal budget for 2010-2012, Finance Minister Alexei Kudrin said on Thursday.
A source in the Finance Ministry said on Wednesday that the three-year budget would run a deficit due to a decline in industrial production and lower tax revenues as a result of the ongoing global economic crisis.
The federal budget deficit is expected to total 7.5% of GDP in 2010, 4.3% in 2011 and 3% in 2012.
The 2010 budget deficit will amount to 3.187 trillion rubles ($101.5 billion). The government has pledged to honor in full its social commitments, which will account for over 70% of budget spending in 2010, the source said.
Also, the government will not make any cuts to spending on defense and preparations for the APEC (Asia-Pacific Economic Cooperation) summit in Vladivostok in Russia's Far East in 2012 and the 2014 Winter Olympic Games in the Black Sea resort of Sochi, the source said.
At the same time, the government is planning to cut spending on some investment and federal target programs, budget-financed organizations and subsidies, the source said.
On the whole, 2010 budget expenditure is expected to remain at 2009 levels, amounting to 9.82 trillion rubles ($312.8 billion) compared with this year's 9.77 trillion rubles ($311 billion), the source said.
The government intends to cover about half the budget deficit in 2010 (1.675 trillion rubles or $53.3 billion) through the Reserve Fund, which will have been squeezed completely by the end of next year, the source said.
Also, 681.7 billion rubles ($21.7 billion) will be allocated from the National Welfare Fund and 830.3 billion rubles ($26.4 billion) from other sources to bridge the budget deficit in 2010, the source said.
In addition, the Finance Ministry plans to raise money on external markets in 2010 after a 10-year break. In particular, the Finance Ministry intends to issue Eurobonds worth 613.6 billion rubles ($17.78 billion) and raise another 11.5 billion rubles ($365 million) from international financial institutions, the source said.
The Finance Ministry is also proposing to increase some taxes. In particular, the ministry wants to raise tax on tobacco and alcohol, increase state duties and export duties on gas and petroleum products and adjust the mineral extraction tax, the source said.
