Government meeting

The agenda: the draft federal budget and draft budgets of state extra-budgetary funds, the socioeconomic development forecast, the guidelines for the unified state credit and fiscal policy for 2023 and the 2024-2025 planning period.

Mikhail Mishustin's opening remarks

Minister of Finance Anton Siluanov's report on the draft federal law The Federal Budget for 2023 and the 2024-2025 Planning Period

Excerpts from the transcript:

Mikhail Mishustin: Good afternoon, colleagues, The Government is finalising the draft federal budget for the next three years. Today, we will review a package of documents for drawing up the federal budget, including the socioeconomic development forecast, the budgets of two state extra-budgetary funds and some others. The Bank of Russia will also present the guidelines of the unified state credit and fiscal policy. We will focus on fulfilling the President's instructions to finance various measures in connection with partial mobilisation. The President has instructed us to take action for meeting the demands of the Russian Armed Forces and military units. We need to take into account all important national aspects, while finalising the main financial law. We need to complete this responsible work as soon as possible. The common result will largely depend on our joint efforts. Information support is an important aspect of partial mobilisation that has been announced by the President. I would like to ask Deputy Prime Minister Dmitry Chernyshenko to organise this work together with the Defence Ministry and other concerned agencies as soon as possible using available information resources, including the Объясняем.рф website, so that everyone would be able to receive answers to various questions of interest to them. Let us turn to the agenda. The draft budget heeds numerous challenges. Large-scale sanctions were declared against Russia, and this called for adopting quick and urgent decisions in response. We also had to implement additional measures for supporting the most affected sectors and vulnerable population strata, for transforming many business processes and upgrading logistics and trade chains. While charting these decisions, the Government analysed all risks in great detail, and the President approved all the main parameters. Consequently, the draft budget combines optimal decisions, in the context of the current situation. The document guarantees the fulfilment of all of the state's social obligations regarding citizens. It stipulates resources for addressing strategic tasks, charted in the form of national goals by the President. In the next two years, there are plans to allocate about three trillion roubles annually for implementing national projects.

Now, specifically regarding the package of documents that is to be sent to the Duma; we will summarise it today. I will start with the forecast. It is based on the effective implementation of the measures to restructure the economy, adapting it to the new conditions, including the redirection of exports, closing-in production chains within the country, ensuring Russia's technological sovereignty, as well as pursuing a balanced budget policy with a level of government spending sufficient to maintain acceptable domestic demand.

This forecast includes a transition to strong economic growth, at a level above 2 percent, in 2024.

The main parameters of the federal budget are based on the approaches approved at the meeting with the President, and take into account proposals for additional revenue that were worked out on his instructions.

As a result, we expect total revenue in 2023 to exceed 26.13 trillion roubles. In nominal terms, it will be less than this year, although significantly more than in 2021, when the economy was affected by coronavirus-related constraints.

Federal expenditures will increase slightly compared to this year, to 29.56 trillion roubles.

The budget will run a deficit throughout the planning period. Government borrowing will be the main source of covering the deficit.

As for the draft State Monetary Policy Guidelines for the next three years, Central Bank Governor Elvira Nabiullina will present them.

Today we will also consider the parameters of Russia's social security and other extra-budgetary funds used to fulfil the Government's social obligations.

We have allocated enough money to continue to provide free medical care throughout the country. The planned expenditures of the Compulsory Medical Insurance Fund exceed this year's spending by more than 10 percent. Financing has been increased to support the sustainable operation of regional hospitals and outpatient clinics. Public investment in the provision of high-tech treatment, including at federal clinics, will increase.

We have also budgeted substantial amounts for thorough medical checkups and the development of rehabilitation programmes initiated by the President.

Now about the Pension and Social Insurance Fund, which will combine the functions of the two existing funds starting next year.

The fund will continue to provide pensions, various compensations and benefits, including benefits for temporary disability, maternity and for families with children.

As per the President's instructions, the Government is setting up a comprehensive system to support them. Parents and pregnant women facing financial hardship can receive monthly financial aid from the state, depending on their individual financial situation and the age of the child.

From 1 January it is proposed to introduce a universal benefit for low-income families. The benefit would cover a range of welfare measures, including payments in connection with the birth or adoption of a child up to the age of three, as well as for children from three to seven years old and from eight to 17. It would also be given to women in need who get registered at an early stage of pregnancy.

In order to apply for this universal benefit, only one application needs to be submitted, without any additional certificates. This can be done either online via the public services portal or in person at an integrated government services centre or the Pension and Social Insurance Fund, if that is the preferred option for the individual.

The state will provide truly uniform and comprehensive targeted support from the early stages of a woman's pregnancy and as the child grows up. It will apply to families with around 10 million children.

Let us move on to the discussion.

Minister of Finance Anton Siluanov will present the draft federal law, The Federal Budget for 2023 and the 2024-2025 Planning Period.

Please, Mr Siluanov.

Anton Siluanov: Mr Mishustin, colleagues,

The budget has been drafted with due regard for the parameters of the macroeconomic forecast that factor in the gradual revival of the economy and the achievement of positive growth rates as soon as 2024. The draft budget also takes into account the normalisation of the budgetary policy and the achievement of budgetary rules that provide for a primary budget balance in 2025. What does this mean? It means that revenues will equal spending, exclusive of sovereign debt servicing costs. At the same time, revenues will include basic oil and gas income worth 8 trillion roubles, while surplus oil and gas revenues will be sent to the National Wealth Fund. This will allow us to reduce the budget deficit from 2 percent of GDP in 2023 to 0.7 percent in 2025. The budget deficit exclusive of oil and gas revenue, also referred to as non-oil and gas deficit, will be cut from 7.9 percent in 2023 to 5.7 percent in 2025. In other words, we will achieve a sufficiently stable and safe level in this regard.

To attain these goals, we have taken measures to increase budget revenues. We have prepared tax initiatives and have taken measures to prioritise spending.

Our tax proposals take into account the withdrawal of a fair amount of the resource rent, which has grown due to changes in global prices on raw materials.

Our main proposals include raising export duties on pipeline gas, withdrawing the surplus revenue of LNG producers, adopting an export duty on fertilisers and energy coal if the prices of these items remain high, increasing taxes in the oil sector by preserving the fuel damper, which has been adjusted this year, and readjusting the system for calculating the mineral replacement tax.

There will be several other tax initiatives. The Finance Ministry has submitted them to the Government, and we would like to ask you to analyse them and include them in the budgetary package that will be submitted to the State Duma.

As for spending, our spending priorities were outlined in the President's addresses and in the Government's resolutions.

They include social benefits for families with children, pensioners and public sector employees; the extension of important programmes such as the payment of maternity capital and mortgage programmes, including family and rural mortgages; measures to create new jobs at education establishments, and school repairs. Over 1,500 schools for over 1 million children will open their doors by 2024. The necessary funds have been earmarked for all of that.

We continue to implement other programmes, such as Primary Care for Everyone, which provides for modernising over 5,000 healthcare facilities.

Funds have been earmarked for building seven world-standard campuses. Considerable funds will be allocated for supporting industry so as to create import substitution facilities.

Measures have been coordinated to create new enterprises in microelectronics, aircraft manufacturing and other industrial sectors.

Of course, we need to concentrate on our plans to proceed with the infrastructure development programmes. The five-year road building plan has been fully funded.

Money has also been set aside for a new project. I am referring to the development of electric surface transport. And, sources have been identified for a new programme called Upgrading the Housing and Utilities Sector.

Measures to support the regions have been preserved. Equalisation transfers will be indexed at a level not lower than the forecasted inflation rate. Next year, equalisation transfers will be increased by 8.5 percent. This creates the revenue base for the regions in need of state support. Infrastructure loans will continue, as will the rescheduling of earlier provided federal loans.

Let me say a few words about deficit financing sources and the size of the National Wealth Fund (NWF). The main emphasis is on domestic borrowing. This year, following our financial market volatility, we are starting to float government securities. Next year we will be more proactive in this respect because we expect that the financial market's capacity will increase. In this connection, we will adjust the upper limit of borrowing for the next two years in such a way as to minimise the use of the NWF and collect more resources from the financial market. Ideally, we will dispense with using the NWF for borrowing purposes altogether. After the National Wealth Fund reaches the necessary level that can ensure budget stability and reliability, its resources will be channeled into implementing infrastructure projects.

In conclusion, I would like to focus on the draft laws submitted to the Government, which are an essential part of the budget package. In addition to changes in the tax laws, amendments have been drafted for the Budget Code, the law On the Basic Cost of the Necessary Social Set, the law On Mandatory Pension Insurance, and a number of others.

Please support the draft budget and the legislative initiatives submitted along with it.

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