Russia Duma approves 2009 budget at 1st reading

MOSCOW - Russia’s Duma lower house of parliament on Monday approved the first reading of the 2009 budget, the first one in a decade to show a deficit.

By (Reuters)

Published: Mon 6 Apr 2009, 10:52 PM

Last updated: Thu 2 Apr 2015, 3:22 AM

Russia’s government plans to use reserve funds to plug the 3 trillion deficit this year as spending remains high to support the economy while the global slowdown dents revenues.

The Duma approved the budget with 314 votes in favour and 91 against with one abstention. The budget now has to undergo two more readings before being passed on to the upper house of parliament, the Federation Council.

Spending is set at 9.7 trillion roubles ($290.4 billion) on revenues of 6.7 trillion, with a deficit of 7.4 percent of gross domestic product. In 2008, budget spending was set at 7.5 trillion roubles.

The spending level is reviving concerns about inflation, Finance Minister Alexei Kudrin said after the lower house of parliament gave initial approval to the document.

“The budget deficit is too big this year and we are supplying 7 percent of the funds from central bank accounts (to cover it),” Kudrin told reporters when asked about potential for inflation to slow in 2009 from last year’s 13 percent.

“We are pumping too much cash into the economy while there is less demand for money...this causes inflation, so I believe that inflationary risks are greater than the risks of slowing inflation.”

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