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Govt. to give $6 bln to 2nd-child benefits in 2007 - minister

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YEKATERINBURG, May 12 (RIA Novosti) - The first government allocations for second-child benefits in 2007 will total 160 billion rubles ($5.91 billion), and payouts will start by 2010, the finance minister said Friday.

Russia's demographic problems were highlighted in an annual state of the nation address May 10 by President Vladimir Putin, who instructed the government to give women at least 250,000 rubles ($9,200) each as financial aid following the birth of a second child as one way to relieve the problem.

"The first benefits will be paid in 2010," Finance Minister Alexei Kudrin told a council of the presidential envoy to the Urals federal district in Yekaterinburg.

Kudrin said the money would be transferred to a mother's personal account three years after the birth of the second child. He said the new scheme would be introduced for an experimental period of ten years, and added that the sum would be indexed yearly depending on inflation.

The 250,000-ruble benefit could be used for three purposes - taking a mortgage, paying education fees or adding to the mother's accumulative pension account, Kudrin said.

Putin said in his speech Wednesday that Russia's 145-million population was declining by 700,000 people a year. The UN has said that Russia's population could shrink by a third by the mid-century.

Kudrin said the budget would be able to afford the program because budget revenues were increasing steadily year by year. He also said the effort would not require money from the Stabilization Fund, set up to accumulate windfall oil revenues above $27 per barrel.

This year, the federal budget is expected to grow by 750 billion rubles ($28 billion). Next year, budget revenue will total about 500 billion rubles ($18 billion), Kudrin said.

The minister said the 2007 budget would earmark 30-40 billion rubles ($1-1.5 billion) on other efforts to improve the country's demographic situation, including a "maternity certificate" entitling mothers to additional free antenatal and natal care in clinics and hospitals.

The money will also include allocations for foster parents, childcare financing for nursery schools, and additional funds to raise birth allowances from 700 to 1,500 rubles ($55) - a substantial sum given that the mayor of Moscow raised the minimum public sector wage in the capital to 4,100 rubles ($150) at the start of this month.

Another 7 billion rubles ($258 million) will be earmarked in long-term loans for the regions to develop the system of foster families.

Kudrin said that the government would have to provide for both orphanages and foster parents for a period when children are transferred to host families. However, he added such a system would eventually prove to be more economically efficient, given that spending on one child in an orphanage was 10,000 rubles against 6,500 in a host family.

Kudrin also called for an end to waiting lists for nursery schools.

"A family must have the opportunity to choose a nursery school for their child easily," he said.

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