Russian Financiers Project Budget Surplus of 1 Percent of GDP in the Coming Three Years

The Russian Finance Ministry projects a budget surplus of more than 1 per cent of the GDP for the coming three years, said Russian first deputy Finance Minister Alexei Ulyukayev in London.

"These surplus parameters will be presented in the Finance Ministry's forecast of the mid-term financial plan, which will be submitted to the government in November," Ulyukayev said at yesterday's meeting with representatives of British business circles organized by the Russian Economic Forum as part of preparations for its regular session in April 2003.

At present the surplus is mainly used to pay off the country's debts, the deputy minister explained. Yet as the debt burden is reduced, "it will be equally important, and it will remain a functioning budget tool," he said.

Taking into account the Russian economy's significant dependence on foreign business environment, the surplus is necessary first of all as a means for accumulating a financial reserve in "successful budget years", according to Ulyukayev. The reserve may be needed for financing budget expenditures during a period of unfavourable foreign business environment, he said.

Apart from this, the surplus is a means for curbing inflation through "sterilization" of redundant money supplies in circulation.