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Russia's budget deficit to hit 7% of GDP in 2009

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Russia's federal budget deficit will amount to at least 7% of GDP in 2009, Russian President Dmitry Medvedev said on Monday.

MOSCOW, May 25 (RIA Novosti) - Russia's federal budget deficit will amount to at least 7% of GDP in 2009, Russian President Dmitry Medvedev said on Monday.

"The budget deficit will be no less than 7% of GDP. This is an optimist figure," Medvedev said at a government meeting while outlining key points for his budget address to both houses of Russia's parliament, due to be delivered in the fall.

Medvedev said the decline in the Russian economy as a result of the global economic meltdown had proved to be deeper than originally expected.

Russian GDP fell 9.5% in the first quarter of 2009, year-on-year, and 23.2% on the fourth quarter of 2008, the Federal Statistics Service reported on May 15.

The Economic Development Ministry earlier attributed the contraction to a slump in construction (a decline of about 20%), lower tax intake, falling investment and retail trade.

The ministry said it expected the country's GDP to decline 8.7-10% in April-June 2009 as compared with the same period of last year.

The ministry estimates that Russia's economy will grow by 1.3% to 2.8% in the second quarter of 2009 as compared with January-March 2009.