The Yabloko faction will develop and submit to the State Duma an alternative draft federal budget for 2002; one of the key aspects of Yabloko’s draft will be the financing of military reform. This statement was made for the press by Sergei Ivanenko, Deputy Head of the Yabloko faction in the State Duma.

During the consideration of the draft budget, Yabloko will insist on the creation of a stabilisation fund which should be formed from additional budget revenues, obtained mainly due to high oil prices. Sergei Ivanenko also explained that this fund should consist of two parts. One of them should be allocated to making payments on Russia’s foreign debt; these payments will amount to USD 14 bln in 2002. The second part should form a reserve and will be additionally allocated for covering foreign debt payments outstanding in 2003, when Russia will already have to pay USD 18 bln.

In addition the Yabloko faction proposes to raise in 2002 the wages for budget-funded workers by 80% and pensions for non-working pensioners by two times.

Assessing the draft budget proposed by the Finance Ministry, Ivanenko stressed that its concept resembles the present one. “Experience shows that when obtaining governmental approval the draft budget developed by the Finance Ministry can be changed in one way or the other by not more than 10% ,” he said. He also made it clear that there will be no radical changes in this draft until the government formally submits it to the Duma.

Sergei Ivanenko also said that budget revenues in this draft amount to 1 trillion 995 bln roubles, with a surplus of 126 bln roubles. The planned growth rates of the GDP in 2002 will amount to 4.3% for the year. Sergei Ivanenko also stressed that this is lower growth than this year, saying that in the first half of 2001 growth rates amounted to 5.7% and even to 8% in 2000. The draft budget for 2002 also envisages inflation from 10% to 13%.

Sergei Ivanenko thinks that the main stumbling block in discussions of the budget in the Duma will be the problem whether this budget is realistic and how accurately it takes into account the forecast additional revenues. Sergei Ivanenko also said that the government will probably again attempt to understate additional revenues, as occurred in the budget for 2001, which envisaged additional revenues amounting to 165 bln roubles, whereas according to forecasts they will
amount to about 300 bln roubles.

According to Sergei Ivanenko, another important issue that will raise many disputes in the Duma will be the distribution of revenues between the federal centre and the regions. Sergei Ivanenko also said that the Budget Code demands that revenues should be distributed 50 : 50; however, this legal provision has not been implemented this year, and it looks like the government will not fulfil it in the future either.

Sergei Ivanenko forecasts serious debates in the Duma in discussing the priorities of budget expenditures. He said that the draft “envisages considerable reduction of expenditures on both industry and agriculture, as well as on the investment programme, and this will face tough confrontation from sectoral and regional lobbyists.”

Based on Interfax reports.