Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Duma Passes Precarious 2000 Budget




Russia's lower house of parliament passed the 2000 draft budget in the third of four readings Monday, setting the stage for Russia to start the new year with a budget in place for the first time in years.


Deputies approved the bill by 281 to 48, with one abstention after similarly strong support in a preliminary reading of the plan, which was written with the International Monetary Fund in mind but could be broken by new Fund threats to hold up loans over Moscow's handling of the situation in Chechnya.


The $27 billion budget still faces a largely formal fourth vote and must also win approval in a single reading by the Federation Council, the upper house, whose representatives took part in early budget negotiations.


President Boris Yeltsin must sign the bill for it to become law.


A senior government official and Duma deputies Monday voiced fears that the spending plan would not be realistic if the IMF held up expected loans, which Managing Director Michel Camdessus said over the weekend could happen because of Western opposition to Moscow's military campaign in Chechnya.


The campaign, which Moscow says is aimed against "terrorists," has sent 200,000 refugees fleeing the breakaway province. Duma budget committee chief Alexander Zhukov said it could cost Russia some $6 billion in expected IMF and World Bank loans next year.


"If [international loan] money does not appear in 2000, then we will need to find $6 billion expected for budget deficit financing from other sources," Zhukov said.


"If this is not possible, then we will have to cut a lot of spending on the 2000 budget."


He also said budget revenues had been inflated in earlier readings, when Communists and their allies won promises of higher spending funded largely by raising tax receipt targets.


"The reality of this budget is also doubtful and therefore as the 2000 budget is carried out there may be some need to reconsider its main parameters," Zhukov said.


The budget committee considered over 2,000 amendments ahead of the reading, which considers line-by-line allocations.


Previous readings set the budget size and less detailed spending breakdown by ministry and other major recipients.


The plan targets spending of 855.1 billion rubles ($26.7 billion) on revenues of 797.2 billion rubles and a deficit of 1 percent of gross domestic product.


===


By the Numbers


2000 DRAFT BUDGET


(factoring in an average exchange rate of 32 rubles/dollar, and 18 percent inflation for 2000)


Allocation/Projection in billions as % of GDP (estimated


of rubles at 5.35 trillion rubles)


Total revenues 797.2 14.90*


Total spending 855.1 15.98*


Deficit 57.9 1.08*


Primary Surplus N/A 2**


* calculated by Reuters.


** The Finance Ministry today said that the primary surplus will be 2 percent.


Source: Reuters