Ministerial Consensus

Kudrin and Gref finally agreed on the Budget Code

Less than a year has passed since the start of the apparatus battles, and the Ministry of Finance managed to agree on amendments to the Budget Code with the Ministry of Economic Development. True, the departments, headed by ambitious ministers Alexei Kudrin and German Gref, could not come to an agreement on their own. Prime Minister Mikhail Fradkov had to intervene in the process. Yesterday, at a regular government meeting chaired by Mr. Fradkov, a compromise was found.

The real reason for the long-awaited compromise was the need for the macroeconomic bloc of the government to begin setting up the budget in February - and not for a year, as was done previously, but for the first time for three years, from 2008 to 2010. It is simply impossible to create a long-term budget for such a period without an agreed Budget Code.

The Ministry of Finance achieved the main thing that was worth breaking spears for. An article on limiting the budget deficit appeared in the Budget Code. It cannot exceed 2% of GDP. In addition, the Ministry of Finance has kept intact the article on the stabilization fund. In other words, Finance Minister Alexei Kudrin won a new serious victory over the “party of increasing government spending.”

Against the backdrop of the eternal budgetary “frozen”, the concessions of Mr. Kudrin’s department to Mr. Gref’s department do not look as significant as previously thought. Although for both ministers they are probably quite, as our officials like to say, “sensitive”. So, the Minister of Finance, as a consistent opponent of increasing government spending, and, accordingly, public investment, insisted that in the Budget Code everything about the unloved topic would be written extremely succinctly. Literally, in one line, without breakdown into types and subtypes of public investment. And the Minister of Economic Development, an equally well-known supporter of increasing government investment, did not want to agree with this position. And as a result, he achieved that the Budget Code contained a complete breakdown of public investments - for federal target programs (FTP), federal targeted investment programs (FAIP) and departmental programs. The Ministry of Economic Development and Trade, of course, will still be in command of this entire “parade”.

In addition, thanks to the current amendments to the Budget Code, a separate article will appear on the investment fund, including a provision that its balances for the year will not be canceled, but will be transferred to the next year, thus accumulating and creating a resource for increasing government investment.

In general, the Ministry of Economic Development and Trade remained on its own. Which seems to be very important today for German Gref, who is striving to maintain his influence as a heavyweight minister. True, it is difficult to say to what extent the role that the Ministry of Economic Development and Trade has reserved in the Budget Code is real and not virtual at the present stage. But the fact that the role of the Ministry of Finance within the government (if, of course, the amendments to the Budget Code are approved by the Cabinet of Ministers on January 25 at the next meeting, and after February 1 by the Duma) will undoubtedly increase is a political fact.

Vera KUZNETSOVA