The Finance Ministry said Monday that the target inflation rate for 2006 had been raised to 9% from 7-8.5% against the backdrop of rapid prices rises earlier this year and forecasts for the next three years had been raised 0.5% to 8% in 2007, 6% in 2008 and 5.5% in 2009.
"Consistent efforts to reduce the rates of inflation must be at the center of the government's attention," the message said. "Anti-inflationary measures must focus on eradicating the causes of relatively high inflation instead of suppressing inflationary outbreaks."
The document instructs the government to balance the country's budget system in the long-term.
"First of all, this means fulfilling the state's obligations in pension provision and other types of state social insurance," the document said.
The president said the government needed to form a register of Russia's spending obligations, which must be taken into account when a federal budget is drawn up.
"The strategy of budget expenditures must be based on long-term trends rather than on current assessments of the situation on world raw material markets," the document says.
The document also says the government must continue its policy of accumulating windfall budget revenues in the Stabilization Fund, which was set up in 2004 to accumulate windfall profits from oil prices and hold back inflation by neutralizing an influx of petrodollars.
"The Stabilization Fund's money accrued above the required minimum must be spent exclusively on replacing external sources of budget financing and (or) the early repayment of sovereign debt," the presidential address said.
The president also says the Stabilization Fund's money - $71.4 billion on May 24 - must be clearly divided into financial resources reserved to minimize the effects of falling world oil prices (the reserve part) and resources accrued above this amount (funds for future generations). The reserve should be defined in percentage to the country's gross domestic product, the president said.
