National defense spending in the 2004 federal budget will be increased by RUR 14.7bn (about $505m), or 3.7 percent of the planned amount, Deputy Finance Minister Tatyana Golikova said on Tuesday.

In particular, RUR 5bn will be allocated to pay the debt on the state defense order, and RUR 6bn is earmarked for law enforcement and security, including RUR 3bn for anti-terrorist activities.

According to Ms. Golikova, the Finance Ministry suggests allocating another RUR 12.7bn (about $434m) to industry, energy and construction. The Ministry also plans to earmark RUR 5bn for the agricultural sector, in the form of payment to the authorized capital of the Rosagrolizing company.

Ms. Golikova also said that Russia’s regional budgets were going to allocate RUR 34bn for housing subsidies. Another RUR 542m will be allocated to regional budgets to pay arrears for housing “that had been provided by regions but that not been paid for by the federal budget due to the lack of funds”.

The size of the Stabilization Fund of the Russian Federation could exceed the planned RUR 564.8bn, due to a favorable economic situation, Ms. Golikova said. The Stabilization Fund is expected to be RUR 709bn as of Jan. 1, 2006.

The Finance Ministry has reviewed the parameters of the federal budget for 2004. Revenues are expected to be RUR 3.274 trillion, RUR 531m more than planned. And expenditures are set at RUR 2.761 trillion, RUR 108.6 more than projected.

rbc