On the Publication of the Federal Budget for 2016

On 15 December, the text of Federal Law of 14 December 2015, No 359-FZ 'On the Federal Budget for 2016' was posted to the Official Governmental Internet Portal of legal information. One day earlier, the RF Ministry of Finance published 'The Budget for the Citizens', an explanatory attachment to the Federal Law 'On the Federal Budget for 2016'.

Just as it had happened in the previous year, in the course of the consideration, by the Federal Assembly, of the draft federal budget prepared by the government, its basic indicators like revenue, expenditure, government debt cap and deficit, as well as its benchmark macroeconomic projections, remained unchanged.

The non-classified part of expenditures allocated to the item National Defense amounts to Rb 1,004bn, but due to the increase of its classified part by Rb 1.7bn, the amount of total expenditure under this item rose on the whole to Rb 3,146.8bn (or 4.0% of GDP). Nevertheless, this figure is 0.5% less than the expenditures allocated this year under that item in accordance with Federal Law of 28 November 2015, No 329-FZ in the amount of Rb 3,163.8bn (or 4.3% of GDP). Thus, for the first time in 15 years, the law on the federal budget envisages decreased expenditures under the item National Defense. However, at the same time, the allocations to the Government Defense Order (GDO) as indicated by the size of the classified part of that budget item, are to be increased by 2.1% – from Rb 2,099bn to Rb 2,142.8bn. Besides, Federal Law No 359-FZ envisages, once again, the issuance of government guarantees for the loans to be taken by the organizations belonging to the military-industrial complex for the purpose of fulfilling GDOs, in the amount of Rb 209bn (this year, the issued government guarantees amounted to Rb 26bn).

The amount of expenditure allocated to the item National Security and Law-enforcement Activity in 2016 will be reduced by 3.5%, or by Rb 73.1bn – from Rb 2,060.2bn (or 2.8% of GDP) to Rb 1,987.1bn (or 2.5% of GDP).

As a result, in 2016 the share of expenditure federal budget to be allocated to the National Defense and National Security items will shrink by 2.0 percentage points, to 31.9%, and so the corresponding burden on the national economy will be reduced by 0.6 percentage points, to 6.5% of GDP; however, this fact by no means implies that any further possibilities for cutting these expenditure items in the federal budget for 2016 are exhausted.

Vasily Zatsepin – Candidate of Military Sciences, Head of the Economics of the Military-Industrial Sector Department