A controversial presidential bill on combating extremism was pushed through the State Duma by On June 6 the Duma resolutely voted in favour of a law to counter extremism in the first reading. The law was passed despite its clearly draft" nature and the views of some parties that this law Duma deputies believe that implementation of Russia's 2003 budget will stabilize Russia's reputation in the global money markets. Pro-government factions of the Duma are so convinced that the draft budget will pass easily in the autumn session of the Duma that Unity leader Vladimir Pekhtin has planned a trip to Brazil at the time of the reading of the first reading of the draft budget. He intends to discuss dams and dykes there.

Chairman of the Duma Budget Committee Alexander Zhukov disclosed that the Cabinet had worked well during the summer with deputies and senators, and that no problems were expected with adoption of the draft budget. He also believes that the notorious "2003 problem," i.e. difficulties with social payments caused by the peak of Russia's foreign debt repayments next year, will not happen.

Next year, Russia plans to return USD17 billion, which will reduce the country's foreign debt to 40% of GDP. This will also serve as confirmation to foreign investors that Russia’s financial system can be trusted. According to the Maastricht Agreements that played an important role in European integration, a country whose foreign debts do not exceed 60% of the GDP may be viewed as a stable one. This figure was reached this year.

As centrist factions agreed certain key issues with the government in the summer, such as funding for road funds and agriculture, it is generally held that the draft budget will easily pass the first reading. Other factions critical of the draft budget are also convinced that the budget will enjoy an easy passage owing to the agreement between centrists and the Cabinet. Deputy Chairman of the Yabloko faction Sergei Ivanenko has called this agreement "indulgence for the Finance Ministry and the Cabinet." In his opinion, the 2003 draft budget is just a copy of the 2002 budget, based on high oil prices.

Regarding the 2003 problem, the share of foreign debts intended for repayment next year represents the price that will be paid by Russia's social sector for the country's membership of the club of developed countries. Zhukov believes that this problem has also been resolved too. He expects to see " more effective appropriation of money oriented to ultimate gains." In his opinion, one of these "ultimate gains" concerns the effectiveness of treating patients in the country. In his opinion, a significant amount of money may be saved, if strict controls over purchasing goods for the state needs are introduced. He believes that up to a third of the money designated for these expenses may be saved. The Duma is so convinced that the 2003 problem will soon be resolved that it even plans to increase the salaries of state employees by one-third.

Leader of Fatherland-All Russia Vyacheslav Volodin even sacrificed his summer vacation for this purpose and spent it negotiating with the Cabinet (as is known, the Cabinet initially proposed a 13% indexation). As regional budgets fund such wage increases, the regions demand a fairer distribution of excise between the federal budget and regional budgets.

The "tobacco" regions oppose a 100% redistribution of tobacco excise to the federal centre planned by the government and demand an equal division of petrol excise.

See also:
Budget for 2003