Russia's social and economic development forecast for 2006 says that inflation should not exceed 8.5%.
"The government will have to carry out additional anti-inflationary measures combined with faster supply growth of consumer goods and services to keep inflation within 8-9%," according to the document.
The package of anti-inflationary measures, drafted together with the central bank and the finance ministry, says that the government should keep social spending within the parameters of the 2006 draft budget, and spend funds evenly throughout the year.
The finance ministry and the Central Bank say the government should keep federal budget non-interest expenditure at the level defined in the three-year financial plan. Also, the government should keep the level of surplus oil revenues channeled into the Stabilization Fund at $27 per barrel or even reduce it. It also proposes putting petroleum product and gas export duty revenue into the fund as of January 1, 2007.
The package of anti-inflationary measures also proposes using the Stabilization Fund resources, above the required minimum, solely for early foreign debt payment.
The finance ministry and the central bank propose that state-run corporations and companies with a large government interest should reduce foreign borrowing to slow foreign currency inflows into the country, and should actively raise funds on the domestic market.
The document proposes specifying the rates of oil extraction tax, excises, and export duties on petroleum products to restrain growth in the prices of fuels, lubricants, and foodstuffs.
It also proposes that regulatory acts be drafted to arrange market trade in petroleum products through the means of compulsory deals for particular consumers and purchases for government and municipal needs.
The document also proposes measures to restrain the growth of housing and utility prices, the tariffs of natural monopolies, and to implement a conservative fiscal policy. In particular, the Central Bank should restrain the increase in money supply below 20% and let the ruble's real rate increase by not more than 4-4.5% per year.
