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The main issue on the agenda was the implementation of the government programme of reducing government spending.

Spending cuts must not lead to a reduction in social expenses allocated in the federal budget, Vladimir Putin stressed. He noted that some positive trends related to the development of the real sector of the economy had evolved by late 1999. Production increased by nearly 8%. The Cabinet successfully met the targets on key macroeconomic indicators of the budget, and there was every reason to believe that it will achieve equally good results in 2000.

Mr Putin said that it was essential to sustain and strengthen these positive trends. He stressed that the budget would be the government’s main instrument in its work, adding that the 2000 budget was realistic and must be implemented without any cuts in social spending.

The acting president spoke about the need to fully implement the programme of reducing government spending endorsed in December 1997. Plans for spending cuts had not been fulfilled for years; therefore, it was necessary to look into the reasons and analyse them.

Spending cuts in 1998 and the first nine months of 1999 totalled 35.71 billion roubles, which is 6.19 billion roubles less than the figure written into the programme. Nevertheless, Alexei Kudrin, first deputy finance minister, said that the government had successfully dealt with the main challenge: the government was beginning to live within its revenues. In order to reach this objective, a great deal of work was done to reduce bureaucratic personnel, especially in local governments. Over the past 18 months, the number of officials was slashed by 78,000 nationwide. The work of local authorities and government institutions was optimised, leading to a saving of 6 billion roubles.

The Cabinet adopted a decision to implement a number of measures aimed at saving a total of 14.6 billion roubles in budget funds and reaching the goal of reducing government spending by June 1, 2000. Mr Kudrin said that the next step would be for the government to draft a concept of budget policy outlining government spending for 2001.

The meeting also endorsed new members of the Cabinet’s presidium, who had joined it as a result of the changes in the structure and composition of the government. The presidium is now made up of Prime Minister Vladimir Putin, First Deputy Prime Minister Mikhail Kasyanov, and deputy prime ministers Ilya Klebanov, Nikolai Koshman, Valentina Matviyenko, Viktor Khristenko, Sergei Shoigu and Vladimir Shcherbak. The presidium will also include Foreign Minister Igor Ivanov, Head of the Government Staff – Minister Dmitry Kozak, Interior Minister Vladimir Rushailo, Defence Minister Igor Sergeyev, Justice Minister Yury Chaika, Economics Minister Andrei Shapovalyants, and Railways Minister Nikolai Aksyonenko.