The Chairman of the Subcommittee of the State Duma
on the Central Bank (the Budget Committee) Mikhail
Zadornov thinks that the inflation rate stated in
the budget-2001 is understated. Zadornov made this
statement in an interview with journalists on September
The draft budget for 2001 “obviously understates”
the level of inflation
-12% , inflation will be considerably higher 15-18%,
He thinks that at a real inflation level of 15-18%,
GDP will total in 2001 at least 8 trillion roubles
(7.74 trillion roubles in the draft budget for 2001).
At the same time Zadornov notes that it is impossible
to forecast the average rouble/dollar rate for 2001,
as it remains unclear what kind of monetary policy
will be adhered to.
According to Zadornov, the draft budget for 2001
fails to answer the main question: “What should be
done with the balance of payments surplus and the
excess money supply?”. Zadornov stressed that the
vagueness surrounding monetary policy rendered all
budget forecasts unclear.
Zadornov also thinks that the main parameters of
the draft budget for 2001 are considerably understated
and that this issue will be discussed by the Budget
Committee of the Duma.
Next year, stressed Zadornov, we will obviously have
additional budget revenues. In this case, according
to Zadornov, it is necessary to form a
budget including a balance of payments surplus amounting
to 70-80 bln roubles (about 1% of GDP). Zadornov thinks
that this should be done, as in 2001 “we cannot rely
on IMF loan” and foreign loans should be replaced
by budget revenues.
Zadornov expressed his conviction that the draft
budget for 2001 would be adopted. “Nobody doubts that
the present Duma will adopt the budget,” stressed
At the same time he noted that it was unlikely that
the first reading on the draft budget could be held
on September 22. Zadornov believes that it is more
likely to be held at the beginning of October, once
most of the deputies have examined the document and
the Duma has received a draft of
monetary policy from the Central Bank of the RF.
Zadornov also expressed his hope that the State Duma
and the Government would be able to reach a compromise
on disputed budget items. Such items
would, claimed Zadornov, concern first of all redistribution
of financial aid between the federation subjects.
While the scheme proposed by the government on the
one hand placed the regions on an equal footing in
terms of assistance, it might at the same time lead
“to a wave of refusal by the regions to fulfil their
obligations,” noted Zadornov.
Zadornov said the expenditures on defence and the
interior may also be disputed. He also noted that
it was unrealistic to think that military expenditure
may be raised to 3% of GDP. He called such declarations
“pure politics”, linked to a certain political moment.
“In military expenditure we should increase expenditure
on only one item – the state order on defence,“ added
He also expressed his concern that less than 20%
of total military will be allotted to the development
of weapons, while all the rest will be “eaten up”.
Zadornov thinks that in 2001 the Ministry of Defence
“will turn into a social ministry … supporting people
Based on Interfax reports.