Government plans additional budgetary expenses for 2005

MOSCOW, June 2 (RIA Novosti) - Additional expenses in Russia's federal budget for 2005 will aggregate 382.7 billion rubles ($11.7 billion), Finance Minister Alexei Kudrin said at a meeting of the government, which approved amendments to the 2005 budget.

"The additional expense obligations of the federal budget in 2005 will make up 382.7 billion rubles but 34.4 billion rubles ($1.22 billion) will be reserved for supporting regions in 2006," Kudrin said. "Thus, social expenses in 2005 will constitute 348.3 billion rubles ($12.3 billion)."

The government is increasing its additional expenses through boosting the revenue of budgets of different levels at the expense of the Stabilization Fund, Kudrin said.

The additional expenses will not increase inflation by more than 10%, he told journalists after the cabinet meeting.

Kudrin said that the growth of non-percent expenses might up 2005 inflation by another 1.5%, "inside the 10%" inflation forecast.

"Our 2005 inflation estimates that lie within the 10% [estimate] were calculated taking these additional expenses into account," Kudrin said.

Non-percent budgetary expenses are those unrelated to servicing both the external and internal state debt and include the funding of science and culture, education, health protection and defense.

Earlier, a cabinet source said that with the ministry-prepared amendments to the 2005 federal budget, the level of non-percent expenses without the single social tax this year might hit 2,922 billion rubles ($104 billion), or 14.3% more than the gross domestic product.

In 2003, the size of non-percent budgetary expenses was 13.5% of the GDP, in 2004 it was 12.3% and for 2006 it is estimated at 13.7%.

"The budget policy turns out to be substantially debilitated: the level of non-percent expenses appears to be rather high," the source said.

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