Duma Passes '97 Budget After 9-Hour Debate

State Duma deputies gave final approval to the draft of the federal budget after nine hours of heated debate Friday, setting a clear spending plan for this year.

The bill was approved by the Duma 245-90 with 17 abstentions.

The budget calls for a deficit of 3.5 percent on revenues of 434.3 trillion rubles ($77.4 billion) and spending of 529.8 trillion rubles.

The spending plan now has to be approved by the Federation Council before being signed into law by President Boris Yeltsin.

The outcome of the vote hinged largely on the Duma's blessing to a separate piece of spending legislation, called the "budget of development," approved in the first reading earlier in the day.

The development budget is a separate fund used to finance specific investment programs, although its revenue will come from within the federal budget. It will be managed by a special agency, 51 percent of which would be owned by the government.

Although the fund is widely regarded as a concession to the opposition, the government appears to be taking the issue seriously.

First Deputy Economics Minister Yakov Urinson said that the budget of development was a chance to streamline the state investment policy.

"It's going to work this time because it is not subject to spending cuts and has a guaranteed source of revenue," he said.

According to Urinson, 21 percent of the money that the government currently collects on the state securities market would be used for investment projects under the budget of development.

Other revenue sources include tied investment loans under government guarantees from international agencies like the World Bank.

Mikhail Zadornov, head of the Duma budget committee, said the development budget calls for spending of some 18 trillion rubles this year, increased by 2.2 times by the end of this century.

"We really need a budget of development. It's time to boost the economy, only this way we can solve social problems," Nikolai Ryzhkov, leader of the Power to the People faction, said in an interview.

However, some of the deputies said the budget of development was a payoff to the opposition for support of the federal budget bill, and they doubted that the project would get off the ground.

Konstantin Borovoi, an independent deputy and the leader of Economic Freedom party, said the money would be stolen or siphoned off just like in many other state investment programs.

"You know what happens when the state money comes into a commercial project. It just gets stolen," he said.

"In today's Russia there is no money, and there never will any cash for this budget of development, fortunately. But I did vote for it because I wanted the federal budget bill to get passed, the government asked us to do this," he said.

Sergei Pavlenko, director of the Center for Economic Reform, said the move reflected an attempt by legislators to show their political weight and put government spending under tight scrutiny.

"It's partly political, partly because it lets them monitor the spending of the government and see that it goes to economic growth," he said.

Most of the Friday's debate focused on amendments to the protected spending items that guarantee state funding in full for specific programs even in case of severe budget deficit.

The protected items currently make up one-third of the budget, and they include spending on education, wages, food and medicine for the army, as well as the interest on government debt.

However, the deputies were keen to use the last session before they go back to their constituencies next week to push through expensive amendments worth billion of rubles.

"This way you want to make the whole budget a protected item," Zadornov said, adding that realistic projections indicate the government will only be able to raise 70 percent to 80 percent of the revenues called for in the budget.

Still, the deputies approved an amendment to set aside 500 billion rubles to finance television programs "to objectively reflect the image of the State Duma and the Federal Assembly."