As per the budget resolutions for fiscals 2012-2014, Russia will look to bring down its budget deficit to 2.7% of the Gross Domestic Product (GDP) by 2012 fiscal. Experts say that Russia will need to employ innovation and private initiatives instead of short term goals and it is imperative that the effects of these efforts reach the masses for overall economic development.
Highlights of Russian Budget 2012-14
The budget will look to create more opportunities for dealing with strategic and long term economic issues.
The Russia budget 2012-14 will attempt to bring about qualitative growth as well as upgrading of the national economy.
It will also aim at long term growth and sustained performance.
It is expected that in the next couple of years the government will be functioning with a deficit budget but it has stated that it will do its best to keep it to a manageable limit and reduce it in a phased manner.
The estimated revenue for 2012 fiscal is expected to vary between 10.6 11.789 trillion roubles but the expenses will range between 12.2 12.658 trillion roubles.
This implies that in 2012 budget deficit will comprise 1.5-2.7 percent of GDP for that period. This rate will reach 1.6 percent of the GDP in 2013 and be reduced to 0.7 percent in 2014 fiscal.
In 2012 fiscal public expenditure on law enforcement and national security is estimated to grow by 37.2 percent.
Defense spending will go up by 20.5 percent in 2012 fiscal.
In 2014 defense related expenditure will increase by 17.9 percent compared to 2013 fiscal. In case of law enforcement there will be an increase of 4.8 percent.
In 2012 fiscal the growth rate in scholarships will be 6 percent but it will be lesser than the projected growth rate of 9.5 percent for 2011 fiscal.
In 2012 the budgetary deficit is estimated at 869.2 billion roubles.
In 2013 the government is expected to earn 12.715 trillion roubles while it will be spending 13.720 trillion roubles. In 2014 the Russian government is slated to earn around 14.101 trillion roubles but it might need to spend 14.580 trillion roubles.
It is expected that Russia will tackle its budgetary deficits through privatization and issuing state debt investment instruments.
The estimated economic growth rate of Russia in 2011 fiscal is going to be 4 percent. In the same period Russia has been able to fulfill its social commitments and reduced the budget deficit significantly.
The highest mandatory levels of insurance related contributions will be brought down in 2012-13 to 30 percent from 34 percent.
In case of non-commercial entities and social and production sectors it will be 20 percent as opposed to the previous mark of 26 percent.
Russian Budget 2012-14: Analysis
The increase in security and defense spending in 2012-14 is unprecedented. This has meant that the national government will not be able to settle the budgetary deficits in the next couple of years.
The amount that was previously being spent on teachers, researchers and doctors will now be provided to servicemen and police officers. The government is expected to finish its police reform by 2012-13, and this will require approximately 300 billion roubles. This explains the significant hikes in defense and security related expenses.
In general terms Russia will give top priority to national security and defense till 2020 fiscal and during this period an estimated 19 trillion will be pumped into state defense expenses.
Expenses related to human capital development are integral to economic progress and innovation of every country but Russia has not been able to increase its spending in these domains with the exception of student scholarships and pensions.
Experts feel that in order to be effective Russia will need to focus on areas such as public services systems, production and financial infrastructures. However, as stated by the Russian President Dmitry Medvedev, the budget needs to institute more effective tax and budgetary policies.
The well-being of Russian economy is significantly dependent on the performance of other countries and this is a major problem for this Eurasian country. It is expected that the new budgetary policies will aid Russia in risk reduction and achieving macroeconomic stability.
Medvedev has also stated that the country s key future economic and social development initiatives should be based on the financial decisions and policies that are accepted by 2012 fiscal.
Russian Budget 2012-14: Recent Happenings
Vladimir Putin, the Prime Minister of Russia, has instructed the national economic policymakers to ensure that they try their best to make the 2012-14 budget a balanced one. He has called for proper verification of public expenditure and stressed that the policies must focus on managing public resources properly.
Putin has asked for special emphasis to be put on infrastructural development and promotion of innovation. He has further revealed that it is necessary for Russia to fulfill its social commitments. He opines that by the end of 2011 fiscal, Russia s budgetary deficit will amount to 1 percent of the Gross Domestic Product.