The reason for the lower level of federal spending is the negative situation in the world economy with shrinking international demands and subsequent lower incomes for Russian companies, the prime minister said in a meeting with cabinet ministers today. According to Medvedev, “all budget posts”, with the exception of specially protested posts, will get a five percent cut. Some parts of the budget could be cut even more, up to ten percent, the government leader admitted.
With the budget cuts, the government`s previously announced ambition to get a balanced budget by year 2015 looks unrealistic. According to plans, incomes and spending would amount to 15,6 trillion rubles in the 2015 budget. Instead, Russia will over the next years continue to have a budget deficit, newspaper Vedomost writes
The cuts come on the backdrop of a serious slowdown in the national economy. Figures from the Russian Statistical Service, Rosstat, show a year-on-year decline in Russian GDP with 0,9 percent in 2012. The similar trend can be seen in Russian industrial production, which in the first half of 2013 was zero.
In the Russian part of the Barents Region, the situation is even more worrisome. As previously reported, in 2012, only one of the five federal subjects in the region, the Komi Republic, saw its industrial output growing. While the Komi industry produced 2,0 percent more than in 2011, the regions of Murmansk and Arkhangelsk had a decline of 1,4 percent and 4,2 percent respectively. The regions of Karelia and Nenets Autonomous Okrug experienced a drop of respectively 0,3 percent and 10,6 percent.
