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. Last Updated: 07/27/2016

3-Year Budget Passes First Test

The State Duma on Wednesday gave preliminary approval to a raft of amendments that would drastically change the way federal budgets are drawn up, starting with next year's budget.

The amendments -- passed in a 336 to 23 vote -- would revise the Budget Code to allow the Cabinet to draft the budget for three years ahead, rather than just the next year.

Drawing up the budget for 2008, the Cabinet will have to submit revenue forecasts and spending commitments for the following two years, said Duma Deputy Yury Vasilyev, head of the Duma's Budget and Taxes Committee.

"In actual fact, this is a new wording of the ... Budget Code, providing for transition to a sliding three-year regime. From now on, the federal budget will be compiled and approved for three years -- for a regular fiscal year and for a planned period," Itar-Tass quoted Vitaly Shuba, first deputy chairman of the Budget and Tax Committee, as saying.

The Cabinet has been drawing up the 2008 budget in compliance with the new guidelines, even though they are not in place yet.

Longer-term planning would make state spending more efficient and eliminate the "vicious circle" of huge disbursements of budget funds at the end of each year, Duma Speaker Boris Gryzlov said. Currently, federal agencies and institutions go on year-end spending sprees to prevent the treasury from taking the cash back. These spending sprees stoke inflation.

But Gryzlov and several other lawmakers complained that the changes would revoke the Duma's control over much spending by allowing the Cabinet to withhold spending goals for amounts below 10 billion rubles, or $382 million.

"Too many decisions about budget spending are left to the government to make," Gryzlov told reporters, vowing to seek more transparency in the next reading.

Independent Deputy Valery Zubov urged lawmakers to vote against the amendments. "If the Duma voluntarily gives up its functions, what are we going to do in this hall?" he said.

Deputy Gennady Kulik of United Russia said the amendments would define the future of Russian parliamentarianism.

Deputy Finance Minister Tatyana Golikova, who represented the Cabinet at the session, said the amendments would not diminish the Duma's role in passing budgets.

Peter Westin, chief economist at MDM Bank, said a longer-term budget was better for the economy as it expanded policymakers' horizons. "There has to be a more comprehensive view of where Russia is going," he said.

Such a budget could ensure stability for the transition period as President Vladimir Putin hands over power to a new president next year, Westin said. But on the other hand, budgets can be changed depending on external conditions such as oil prices, he said.

The second and the third readings are expected in April. The Cabinet is to submit the 2008-2010 budget to the Duma by May 1.