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The inflation rate in Russia this year will be at least 11 percent
The inflation rate in Russia this year will be at least 11 percent, believe Mikhail Zadornov, member of the State Duma budget and tax committee. The official forecast of this year's inflation is 10 percent. "It is already clear that inflation of 10 percent on year end is implausible," Zadornov said at a press conference in RIA Novosti on Thursday. "Inflation will amount to at least 11 percent". According to him, 11 percent will be reached if the Central Bank starts containing the rouble's nominal rate. "And it is what it is going to do," he assured. Year-end GDP will grow, while the budget's incomes will exceed the forecast, Zadornov believes. Speaking on revenues from privatization, the deputy predicted that they would exceed the forecasts in both 2004 and 2005. "The [2004] budget expects only 45 billion roubles [$1=29.22 roubles], while the transaction with LUKoil alone will bring $2 billion. This is much more than the forecast revenues," he said. In the draft 2005 budget revenues from privatization are expected to reach "approximately at the current year's level", that is about 45 billion roubles, the MP pointed out. In his opinion, the figure is "definitely underestimated," as next year will see privatization of a number of large companies. "Just one large transaction, for example, with Svyazinvest, will be enough to exceed this sum," he said. Moreover, Yukos's back taxes will provide additional incomes. "This year's budget takes into account only 69 billion roubles, while the total back-tax bill to Yukos for 2000-2001 has already exceeded 180 billion roubles. Accordingly, incomes under this item will be higher," Zadornov pointed out. As to budget expenditures on national defense and security in 2005, he said that they would be raised mainly at the expense of the increased state defense order. "Expenditures on national defense and security will grow by the total of 3 percent of GDP," he pointed out. "This growth will be achieved mainly by increasing the defense order by 40 percent compared to the current year." Next year the government does not intend to index monetary allowance of the military and civilian personnel, it will just raise bonuses for difficult service from 50 to 120%, he said. Increased financing of national defense and security will be to a large extent connected to changes in the legislation, especially related to subsidies, Zadornov pointed out. Thus, the real increase will not be so significant, and this bloc is in for a heated discussion in the Duma during the second reading, he believes
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