Russia cuts govt spending by additional 15 per cent
As a result of steep decline in industrial output due to slowdown, Russian Premier Vladmir Putin has ordered additional 15 per cent cut in government spendings on top of equal budget cuts approved last year.world Updated: Feb 16, 2009 23:41 IST
As a result of steep decline in industrial output due to slowdown, Russian Premier Vladmir Putin has ordered additional 15 per cent cut in government spendings on top of equal budget cuts approved last year.
The biggest cut, 33 per cent, will hit the Energy Ministry, which has been the main revenue earner during the eight years of oil windfall.
Putin has ordered the government ministries to cut spending by another 15 per cent on top of the 15 per cent budget cuts approved in end of the 2008 as Russia’s industrial output fell by 16 per cent, year-on-year, in January.
According to “Vedomosti” business daily cuts will affect all recipients of funds from federal budget, except courts.
Compared to December 2008, industrial production in January 2009 was 19.9 per cent lower, the State Statistics Service - ‘Rosstat´ today said.
The Foreign Ministry and the State Duma (lower house of parliament) have been asked to cut their spending by 12 per cent in the current fiscal.
The budget sequester will enable the government to save USD 43 billion, bringing the total budget cuts to 17 per cent, as only unprotected budget items were cut by 15 per cent in both cases, Vedomosti reported quoting experts.
Earlier, the Economic Development Ministry had projected 3.2 per cent drop in production in 2009 with an average oil price of USD 50 per barrel.
It later substantially revised its forecast downward as the projected oil price fell to USD 41 per barrel and Putin ordered the government to revise the budget for the current fiscal.
Speaking in the Duma earlier this year Finance Minister Alexei Kudrin said the GDP growth in 2009 will be close to nil.
Production of fossil energy resources -coal, oil, and natural gas production was down year-on-year in January 17.7 per cent, 0.8 per cent and 10.5 per cent, respectively, “Rosstat” said in its report.