Three-year budget approved in Russia

According to new budget of Russia there’ll be a slight drop in oil prices and big increases in defense and social service spending. Spending will rise by nearly 25 percent by 2010.

The Federation Council voted 145-4 with one abstention to pass the plan, Russia's first multiyear economic program since the Soviet-era five-year plans.

The document sees revenues dropping slightly in 2008 from 2007 levels to 6.64 trillion rubles (US$260 billion; EUR190 billion) while spending will rise to 6.57 trillion rubles (US$257 billion; EUR188 billion) - up 20 percent from this year. By 2010, the plan calls for a balanced budget of 8.09 trillion rubles (US$317 billion; EUR232 billion).

The budget also forecasts a drop in prices for Russia's Urals blend oil this year to US$53 (EUR39) a barrel in 2008 and US$50 (EUR36) in 2010.

Defense and security spending will rise by 25 percent by 2010 - from 1.03 trillion rubles (US$40 billion; EUR29.27 billion) in 2008 to 1.29 trillion rubles (US$51 billion; EUR37.32 billion) in 2010.

Russia's state coffers are overflowing with petrodollars and its finances have been transformed since the economy's collapse in 1998.

After running a tight fiscal policy in previous years that was aimed at building up Russia's reserves, the government has begun spending more on social projects as well as programs aimed at diversifying the economy away from a reliance on raw material exports.