The draft envisages budget proceeds of 2 trillion 742 billion 840 million rubles which exceed the planned spending by 83,403 million rubles (0.5 percent of the GDP). Inflation in 2004 is expected to be at the 8-10 percent level, while the exchange rate of the national currency is estimated at 31.3 rubles per US dollar with world oil prices at 22 dollars per barrel.

Priority spending will go to national defense (19 percent increase compared to 2003), the judiciary reform (30 percent), law enforcement and state security (27 percent), health care (23 percent), and education (21 percent).

For the first time the budget calls to create a stabilization fund which Deputy Prime Minister and Finance Minister Alexei Kudrin described as "a strategic reserve for the future" and which is to accumulate by the end of 2004 83.4 billion rubles thanks to high world oil prices.

The draft needs at least 226 votes for approval, while Chairman of the budget and tax committee Alexander Zhukov estimated 250-260 lawmakers would vote for it. The pro-Kremlin centrist parties will ensure the necessary majority. The leftist opposition and the liberal Yabloko party will traditionally oppose the draft. The Union of Right-Wing Forces (SPS) conditioned its backing to the budget on the disclosure of concrete military appropriations.

Prime Minister Mikhail Kasyanov promised to address lawmakers and urge them to pass the budget under all four readings by November 28 thus maintaining stability in the country in the election year. "This is a principle political step as the stability in the country and society depends on it", he said.

The first reading approves the major parameters of the budget, the second deals with spending breakdown by articles, the third focuses on appropriations within the articles, and the fourth deals only with style editing of the text.

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Budget-2004

ITAR-TASS, September 19, 2003