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Medvedev orders government to cut budget financing from oil revenues

Petroleum Pipeline and Electrical TowersMOSCOW, January 19 (RIA Novosti) -Russian President Dmitry Medvedev has instructed the government to consider the possibility of halting the financing of budget expenditures through additional revenues from oil and gas sales in 2011, the Kremlin said Wednesday.

Medvedev also instructed the government to draft proposals for oil revenue spending and the maximum amount from the budget that could be financed from these revenues starting from 2012.

Russia was forced to spend large funds from oil and gas revenues to plug the holes in the budget during the recent global financial crisis, rather than put additional revenues in reserves.

Russia's budget deficit amounted to 3.9% of GDP in 2010, while the Reserve Fund sank 39.4% to 775.21 billion rubles ($25.44 billion) in December 2010 and the National Welfare Fund (NWF) dropped 2.4% to 2.69 trillion rubles ($88.44 bln).

Russian Finance Minister Alexei Kudrin suggested on January 13 that Russia's reserve Fund should be kept as "a cushion" for emergency situations similar to the recent economic crisis, rather than be spent on budget financing.

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