Banking & Finance Report.
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President Vladimir Putin has sent a budget message for 2005 to State Duma Speaker Boris Gryzlov and Federation Council Chairman Sergei Mironov, a source in the Kremlin press service told Interfax on July 12. Putin has also sent a message “On Budget Policy in 2005″ to Prime Minister Mikhail Fradkov. Assuring the overall macroeconomic balance is the overriding goal of the budget policy, Russian President Vladimir Putin said in a budget message to the Federal Assembly posted on the presidential website. “The budget’s basic parameters must guarantee the fulfillment of budget commitments such as eliminating excessive monetary liquidity, and reducing the expenses in servicing the national debt in light of the significant amounts to be paid in 2005,” the message reads. In this context, using money from the Stabilization Fund for “the non-interest costs of increasing it over the amount of 500 billion rubles stipulated by legislation is undesirable,” the statement says. The amounts to be accumulated in 2005 over the minimum set for the Stabilization Fund “should be used in replacing the sources of paying the national debt and financing the deficit of the Pension Fund unless other ways to tackle the related problems emerge,” the message says. “The budgetary process should be evaluated in terms of managing the results rather than managing the costs. The budget formation should be goal-oriented while budget appropriations must be closely tied to state functions, ” it reads. President Vladimir Putin’s message to the Federal Assembly on the 2005 Budgetary Policy calls for increasing the role of a long-term financial plan in the budget process. “Starting in 2006, this document must be approved by the government of the Russian Federation” so as “to expand the planning horizon, improve the predictability of the budget policy and the quality of budget drafting and create incentives for optimizing budget expenditures,” the message reads. The message calls for a clear definition of indexes of the activities carried out by state agencies, making federal program tackle problems facing large investment, R&D and structural interdepartmental programs with clearly defined indexes of success, and creating a new legal framework for enforcing the rules of government purchases, in particular in the fields of defense and security. FINANCIAL POLICY STATE DUMA PASSES LAW ON DEPOSITS IN BANKRUPT BANKS The State Duma on July 10 passed a bill in three readings that will allow the Central Bank of Russia to make payments on deposits of individuals in failed banks that are not part of the deposit insurance system. The bill aims to ease panic among bank clients. Central Bank First Deputy Chairman Andrei Kozlov told Interfax the law will be back dated and so will apply to all banks that have lost their licenses since December 2003, including Sodbusinessbank and Credittrust. The law outlines the conditions in which the Central Bank can make payments, including under a court ruling to declare a bank bankrupt. The law introduced by the Central Bank and supported by the government will increase confidence in the banking system. The size of payments by the Central Bank of Russia will be based on 100% of the claims by the client recognized under the law on bankruptcy, but not more than 100,000 rubles (about 80% of deposits do not exceed that amount). |