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Russia predicts record budget surplus this year

Russia expects to record a budget surplus of 1.08 trillion rubles (US$44 billion) reaped from strong oil and gas revenues this year and to weather stormy global markets with aplomb, officials said on Monday.

Russia, one of the world's major emerging markets, has not been immune to the peaks and plunges that have plagued other stock markets in recent weeks, but the fluctuations have been less extreme -- something Russian President Vladimir Putin noted with apparent satisfaction in a Cabinet meeting.

"I noticed that [on Friday] all the world's trading places were in the minus, except Russia's," he said. "Russia's was up 2.2 percent."

But that upward bump up on the benchmark RTS index took place before US markets took a fall late on Friday. On Monday, the RTS dropped about 2.5 percent, apparently in reaction to even bigger market drops in Asia that in turn were triggered by concerns about the US economy.

Record-high oil prices have brought revenue pouring into Russia, which has in turn fueled other investments.

Russian Prime Minister Viktor Zubkov told the government budget commission that overall revenues are expected to be 1.4 trillion rubles higher this year compared with last year, leaving a vast surplus even with planned increases in wages and in Russia's notoriously stingy pensions, the ITAR-Tass news agency reported.

Economics Minister Elvira Nabiullina told the Cabinet meeting that the economy is seeing soaring demand in the retail sector -- some 17 percent higher last month compared with a year ago -- and that housing indicators also are strong.

The figures "allow us to say that the fundamental factors of the growth of the Russian economy are sufficiently strong to support growth and to hope that the Russian market will be sufficiently stable in relation to the world financial crisis," she said, according a meeting transcript released by the Kremlin.

Amid the boom, inflation remains a concern. The economics ministry has forecast that inflation will reach 12 percent this year and on Monday revised its prognosis for next year upward, saying inflation that year would likely be 5.8 percent to 7 percent.

Also on Monday, the Agriculture Ministry announced that major Russian food retailers would extend price freezes on basic food products to May 1, beyond the current agreement that expires tomorrow.

Some of Russia's largest food retailers and processors are included in the list of companies participating in the freeze.

The freeze on bread, milk, cooking oil and eggs is aimed at taming inflation, but some economists and analysts have criticized it as a return to Soviet-style price controls intervention.

Others said the government was trying to avoid angering Russian voters ahead of last month's parliamentary elections and the presidential vote in March.
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