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. Last Updated: 07/27/2016

Customs Misses May Target by 30%

As the State Customs Committee welcomed its fourth boss in the space of 13 months, figures were released showing that the organization fell a massive 30 percent short of its collection targets in May.

'This is the first time [in almost a decade] that the customs committee fails to meet its government-set target," said First Deputy Prime Minister Viktor Khristenko, speaking at a ceremony held to introduce new customs chief Mikhail Vanin to the public.

With overall revenues sliding, the customs collection figures raise doubts about Russia's capacity to meet even its current modest spending plans, especially if the recent round of reshuffles continues to disrupt the government.

Those fears were exacerbated later on Wednesday when the Finance Ministry announced that Russia's federal budget deficit for May rose to 4.2 billion rubles ($172.13 million) from 1.94 billion rubles in April and was 24.1 percent above the target.

The ministry said Russia had spent 543.9 million rubles to service domestic debt and used 22.5 billion rubles of central bank funds to service foreign debt.

Budget revenues in May were 36.4 billion rubles, or 92.4 percent of target, while spending was 40.5 billion rubles, or 87.2 percent of target, the ministry said, quoting preliminary data.

Customs collected just 11 billion rubles ($500 million) in trade duties for May, 5 billion rubles short of its monthly target of 16 billion rubles.

Customs has been a real hot seat since former customs chief Anatoly Krugov was fired in May 1998.

His replacement, Valery Draganov, initiated a wide ranging purge at the customs committee aimed at cleaning up one of the more chronically corrupt sections of the Russian government, dismissing officials suspected of graft.

Draganov then resigned under a cloud in March of this year, giving way to Nikolai Bordyuzha, former head of the presidential administration.

Vanin - who Draganov put on reserve duty on suspicion of corruption - comes into office with many media outlets speculating that his tarnished history was precisely the reason he was chosen. NTV television has been among those portraying his appointment as a victory for Kremlin insiders hoping he will help them get easier back door access to state funds.

Both Khristenko and Vanin did their best to counteract such rumors.

"I understand all of you have second thoughts with regards to this appointment," said Khristenko on Wednesday, addressing customs officials as he officially presented their new boss to them.

Vanin was officially under suspicion in at least two separate criminal investigations into customs activities, but no charges were ever laid against him.

Vanin said Wednesday all the accusations against him had been groundless. He said the setback to his career last year had been the result of political maneuvering. "The head of the customs committee was not free when he made the decision [to relegate me to reserve duty]," he said.

Political or otherwise, the endless reshuffles at customs do seem to have had a destructive rather than a constructive effect. Customs revenues continue to slide this year and are expected to fall to $8 billion, down from $13 billion in 1997 and $10 billion in 1998.

At the start of the year the government planned to collect 200 billion rubles of duties, representing some 40 percent of federal government revenues.

But warning signs appeared as early as January and February, when customs collected 18 billion rubles.

The wheels really started to fall off in April, when customs fell 4.4 percent short of target.

The first deputy minister offered little in the way of solutions to the problem, failing even to explain the shortfall and offering little but pious hopes for the future. "I hope the May fiasco is not a sign of the destruction of the whole system," said Khristenko, promising no purges would follow Vanin's appointment.

In June customs should collect 18.6 billion rubles of duties plus 5 billion rolled over from May.

This would set the gargantuan monthly target of 23.6 billion rubles, 40 percent of the 57 billion rubles collected in the first five months of the year.

"Imports fell 50 percent but no structural changes were made to improve the way customs work," said Mikhail Delyagin, head of the Institute of Globalization research center.