Ministry of Finance of the Russian Federation
Ministry of Finance of the Russian Federation
26.05.2011

Statements of Deputy Head of the Government of the Russian Federation – Finance Minister of the Russian Federation A. Kudrin

 

Russia’s Kudrin says royalty tax for gas may increase

MOSCOW, May 27 (PRIME-TASS) -- Russia’s Finance Ministry has not ruled out increasing royalty taxes on natural gas, Deputy Prime Minister and Finance Minister Alexei Kudrin said late Thursday.

Kudrin did not provide any specifics as to the size of the increase.

Russian Prime Minister Vladimir Putin ordered the Finance Ministry to consider increasing royalty taxes on natural gas on May 5.

 

Russia’s budget spending 2012-2013 to grow 3-4 pct a year - Kudrin.

MOSCOW, May 26 (Itar-Tass) —— Russia’s real state budget spending in 2012-2013 will be growing proportionately to the GDP, by 3-4 percent a year, Deputy Prime Minister, Finance Minister Alexei Kudrin told the media.

“In nominal terms, under the scenario we would like to use as the base one, spending will be growing by 8-10 percent, but in real terms, by approximately 3-4 percent a year,” he said.

“Our task is to ensure spending in real terms should not grow faster than the economy in general,” Kudrin said.

Commenting on media reports to the effect the Ministry of Finance had reportedly called for cutting spending, Kudrin said that one of the scenarios did envisage a slowdown in spending.

"Given the reduction of deficit by 2015 to zero, we need to increase spending slightly less than GDP growth," he explained. In this case, according to Kudrin, the reduction in expenditure growth will be achieved through programs that end in 2013.

In addition, the finance minister commented on rumors there were plans for cutting spending on the defense industry. "One scenario actually proposed a smaller increase in spending on state defense contracts, and the transfer of funds to future years," he acknowledged. In this case, according to the finance minister, "if one takes the costs associated with the state program for armaments, reform of cash allowances, military pensions and the federal program in the field of the defense-industrial complex, all together they will grow by more than 1 trillion rubles.”

But he acknowledged that the Ministry of Finance supported an increase in contract service rates at a little lower pace.

"We do not cancel, but only slightly adjust the growth rates of some indicators," Kudrin said, adding that "a decision on this will be taken by the president."

 

Russia to curb spending growth, cut payroll taxes

MOSCOW, May 26 (Reuters) - Russian federal spending will grow in line with the economy over the next two years as the government targets a balanced budget by 2015, Finance Minister Alexei Kudrin said on Thursday.

Speaking after a cabinet meeting to review fiscal strategy, Kudrin said spending would rise by 3-4 percent a year in real terms in 2012 and 2013, and in nominal terms by 8-10 percent.

"Our goal is that spending does not grow faster than the economy," Kudrin told reporters.

"In terms of our longer-term goals, spending needs to grow a bit more slowly than GDP (gross domestic product) to achieve a zero budget deficit by 2015."

Russia posted a string of fiscal surpluses under Kudrin, who has been finance minister for over a decade, but the budget plunged into deficit in 2009 as a result of the global financial crisis.

Counter-cyclical spending, in particular on higher pensions, pushed up federal spending to 22.7 percent of GDP last year from a pre-crisis level of 18.3 percent, while revenues fell to 17.4 percent of GDP from 22.5 percent over the same period.

Kudrin said he would seek to curb defence spending by delaying major arms purchases and slowing the hiring of professional soldiers to replace draftees in Russia's million-strong forces.

MORE TALKS ON GAS TAX

The government is in the early stages of drafting its three-year budget, and faces challenges on the revenue-raising side as it looks for ways to fund a planned reduction in payroll taxes that fund pensions, health and jobless insurance.

The Finance Ministry has proposed hiking the mineral extraction tax on natural gas to raise $5 billion a year in a measure that would hit state-controlled gas export monopoly Gazprom, which pumps 80 percent of Russian output.

Kudrin said, however, that no agreement had been reached on the measure and a further round of talks was planned on Friday.

Industry sources said Gazprom has proposed that mineral extraction tax on gas, which was hiked by 61 percent this year, be kept unchanged in 2012.

PAYROLL TAX CUT

Earlier, Prime Minister Vladimir Putin said broad agreement had been reached on a call by President Dmitry Medvedev to cut payroll taxes at the start of next year, before Russia holds a presidential election in March 2012.

"I am not ready to say the final parameters but it is a consolidated position of the government, with the presidential administration and the president, Putin said. "We all believe that it should be done but we should not make any mistakes."

Putin and Medvedev, his successor as president, have both said they may seek election to Russia's highest office. But neither has declared his candidacy and it is unlikely that they would run against each other.

The payroll tax was increased to 34 percent of wages from 26 percent, driving some jobs into the black economy and undermining Russia's economic recovery, some economists argue.

That slowdown was confirmed on Thursday with a flash GDP estimate for April showing that annual growth slowed to 3.3 percent from 4.2 percent in March.

"We are now actively working on how to cut social security taxes. It is not a simple task. But I believe we must do it," Putin said in a speech to a business audience.

Putin reiterated a goal that Russia's economy should be one of the world's five largest within a decade, saying it was vital to reduce dependence on resource exports.

Russia's $1.5 trillion economy is now the world's 11th largest. The International Monetary Fund forecasts that nominal GDP will reach $3.2 trillion by 2016, which would already rank it in the world's top five by then.

 

Still no joint BRIC candidate for IMF - Russia

MOSCOW, May 26 (Reuters) - The BRIC group of large emerging nations has still to agree on a candidate to replace Dominique Strauss-Kahn as head of the International Monetary Fund, Russian Finance Minister Alexei Kudrin said on Thursday.

"There is no single BRIC candidate for now," said Kudrin, referring to the grouping of Brazil, Russia, India and China.

"Will we want to join forces and support a single candidate? I do not rule it out but it will take some time," he told reporters in Moscow.

Kudrin said Russia still backed Grigory Marchenko, the head of the central bank in Kazakhstan who has been put forward by the ex-Soviet Commonwealth of Independent States, but suggested Moscow's position may shift.

Kudrin was even-handed in his comments on the two declared candidates, saying "we like" French Finance Minister Christine Lagarde and calling Mexican central bank chief Agustin Carstens "very professional".

 

Russian finance minister denies seeking military personnel cuts.

MOSCOW, May 26 (RIA Novosti) - Russian Finance Minister Alexei Kudrin denied on Thursday that his ministry had proposed cutting military personnel as a government spending reduction measure.

"No one is going to reduce the number of military servicemen, which will remain at a level of 1 million," said Kudrin, who is also deputy prime minister.

He added, however, that the Finance Ministry had proposed slowing down the increase in the number of contract servicemen.