It will take Russia four or five years to return to the deficit-free budgets that the country enjoyed before the global financial crisis hit, Deputy Finance Minister Dmitry Pankin said on Wednesday. "Our goal is to cut the budget deficit," Pankin said at the MICEX-2010 financial forum in Moscow. "It will take four to five years to end the deficits."
Russian Finance Minister Alexei Kudrin on Tuesday promised 10 years of the country's development without any increase in government spending. "After a four-fold increase in budget spending, we'll have a 10-year period without expenditure growth," Kudrin said. The government plans to resort to foreign borrowings this year for the first time since the 1998 default, with the 2010 budget deficit projected at 6.8% of GDP.
Russia, which continues to receive the largest part of its revenues from the export of raw materials, was hit hard by the 2008 global financial and economic crisis and needs to balance its finances as its reserve fund, set up in previous years to accrue surplus oil revenues, may be completely used up this year. Pankin said Russia was likely to borrow more funds domestically this year due to new opportunities opening up on the internal market. Russia earlier planned to raise $17.8 billion on international markets, but higher oil prices mean borrowing is likely to be less than expected.
