Budget Passes Virtually Unchanged

The State Duma on Wednesday passed the 2007 budget in a key reading with negligible changes, earmarking half of the spending for state bureaucracy, defense and security.

In a small nod to critics, the Duma reduced spending on state bureaucracy by a fraction, rerouting 0.2 percent of total budget spending toward education, buying more apartments for military officers and supporting aircraft makers.

The budget, passed in a second and decisive reading, stipulates a 28 percent increase in spending for the year when voters will cast ballots for a new State Duma. In early 2008, Russia will also hold presidential elections.

The spending spike for 2007 follows a 40 percent budget increase this year.

Much of the 2007 spending growth will go toward raising state salaries, army wages and pensions as of next September or October, just weeks before the Duma elections, said independent Deputy Vladimir Ryzhkov.

"The authorities are preparing favorable ground for United Russia," he said.

In a risky move, the government based budget revenues on the price of Urals crude oil at $61 per barrel. Urals crude futures slipped 2 percent more on Wednesday, selling at $56 per barrel.

"It's a very alarming point," Ryzhkov said. "The risk is very high that the state will not get the revenues it is planning for."

The government plans to collect 6.96 trillion rubles ($259 billion) expected in revenues next year. Total spending will rise to 5.46 trillion rubles ($203 billion) from 4.27 trillion rubles ($159 billion) in 2006.

One of the main budget amendments approved Wednesday was the decision to cut "general state spending" by 10.6 billion rubles ($394 million), Duma Speaker Boris Gryzlov said.

"It's nothing, it's ridiculous, it's like a margin of error," Ryzhkov said.

In the first reading, the budget earmarked 821.3 billion rubles ($30.7 billion) for so-called general state spending, which includes salaries of state officials.

In addition to education, apartments and aircraft makers, the Duma redirected the 10.6 billion rubles toward culture, housing maintenance and new metro construction, according to Gryzlov and the amendments.

The projected spending of 821.2 billion rubles ($30.5 billion) on defense and 664.8 billion rubles ($24.7 billion) on state security and law enforcement remained unchanged.

The Duma passed the latest reading of the budget in a 343-86 vote, with one abstention.

Finance Minister Alexei Kudrin said the amendments "made sense."

Communist Party leader Gennady Zyuganov said the budget ignored the need to support farmers and manufacturers of farming equipment.

The third of four Duma readings of the budget is scheduled for Nov. 10. The budget also requires the approval of the Federation Council and the president.