At a meeting of the Commission for Modernization, President Dmitry Medvedev proposed that Finance Minister Alexei Kudrin resign by the end of the day if he cannot come to terms with the head of state.
At a meeting of the Commission for Modernization, President Dmitry Medvedev proposed that Finance Minister Alexei Kudrin resign by the end of the day if he cannot come to terms with the head of state.
On Sunday, Kudrin said that he does not see himself in the Medvedev government because of their disagreements on a number of issues, primarily concerning heavy military expenditures. Also, according to Kudrin, there is the acute issue of the Pension Fund’s deficit.
During an address to the Federal Assembly on November 30, 2010, President Medvedev instructed the government to draft proposals on changing the proportion of revenue between budgets at different levels of government. At a research and practice conference in the Audit Chamber, Kudrin announced that it would be difficult to redistribute budget funds from the federal to the regional level.
In his address to the Federal Assembly on November 30, 2010, Medvedev said that the rate of insurance contributions for small business would remain at 26% in 2011-2012. Kudrin said that this measure would cost extra-budgetary funds 30 to 40 billion rubles in revenue.
On March 30, 2011, Medvedev instructed the government to draft proposals on reducing the rate of insurance contributions beginning in 2012, because the 34% rate that was introduced in 2011 had proved to be unmanageable for many kinds of business. Kudrin said that “these measures…will increase the pension system deficit.”
During his budget address of June 29, 2011, Medvedev said that oil and gas revenues could help make up the losses in the pension system from a reduced rate of insurance contributions to social security funds. Kudrin said that the government did not yet know how to compensate for smaller social security contributions.
On June 17, 2011, Dmitry Medvedev said that beginning in 2012 the maximum rate of social insurance contributions would be reduced from the current 34% to 30% during a transitional period, and to 20% for small businesses involved in manufacturing. Kudrin maintained that these reductions would cost the federal budget 100-160 billion rubles per year in revenues from 2012-2013.
In his budget address, Medvedev said that it would be possible to start levying the local tax on real estate as early as in 2012. Kudrin said that the tax on the market value of real estate could only be introduced in 2013-2014.
On June 17, 2011, Kudrin said he was ready to schedule an appointment with Medvedev to discuss an increase in military spending of 1.5% of the GDP in 2012. He called this increase a “new challenge for next year.”
According to an RIA Novosti source within the financial sector, Kudrin’s position could be filled by Tatyana Golikova, currently the minister of healthcare and social development, president of VTB-24 Bank Mikhail Zadornov or Kudrin’s deputy Sergei Shatalov.
Another source told RIA Novosti: “It is useless to engage in guesswork about who might fill the finance minister’s seat. After the events at the United Russia conference, to make any predictions would be pointless.”
Kudrin’s resignation will be negatively perceived by investors, who see him as a guarantor of stable budget policy.
