Man with a plan: Alexei Kudrin
Kudrin caps oil fund transfers
Transfers to the Russian budget from a proposed oil and gas fund should be capped at 4% of gross domestic product, Finance Minister Alexei Kudrin said today.
Kudrin was speaking to reporters about the move to a three-year budget cycle, approved by President Vladimir Putin a week ago. A final draft of the budget strategy should be ready next Monday, Reuters quoted him as saying.
"The level I will propose for transfers from the oil and gas fund to the budget is 4% of GDP," he said.
The strategy proposes replacing Russia's existing budget stabilisation fund, which has gathered windfall oil revenues and is now worth over $100 billion, with an oil and gas fund and a more growth-oriented fund for future generations.
Kudrin, a fiscal hawk who has used big fiscal surpluses to pay down Russia's foreign debts, estimates oil transfers to the budget at 5% of GDP in recent years and said that figure would be very high in 2008.
Russia holds parliamentary elections in December and elects a successor to Putin next year. Budget spending will rise by 28% this year as the government hands out big rises in public sector pay and pensions.
Kudrin also forecast that capital inflows into Russia would average $30 billion to $40 billion a year over the next few years. Net capital inflows last year totalled $41.6 billion, boosted by Russia's abolition of capital controls in July.
Capital inflows are expected to play an increasingly important role in Russia's balance of payments as its current account surplus is forecast by economists to shrink over the next few years.