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Putin Becomes Prime Minister

Vladimir Putin became Russia’s prime minister on Thursday after winning parliamentary approval. Before the vote he urged increased spending to boost growth while calling for tax cuts on oil companies and lower inflation.

Putin stepped down as president on Wednesday and handed power to his chosen successor, Dmitry Medvedev, a 42-year-old lawyer from St. Petersburg. Medvedev submitted Putin’s nomination to the State Duma hours after taking office.

“Russia has become much stronger in recent years,” Putin said in his Duma speech. “Our resources are sufficient to achieve even more complex, even more ambitious tasks and goals. I’m for using our accumulated potential effectively and judiciously.”

As president, Putin oversaw eight years of growth in Russia, the world’s biggest energy exporter, which is now in a 10th straight year of economic expansion.

As prime minister, Putin said he plans to take advantage of Russia’s wealth to improve transportation, health care and education, to promote agriculture and scientific research and to raise military pay, among other priorities.

The government increased spending by 40 percent last year, helping fuel inflation that accelerated to an annual 11.9 percent. Putin said inflation for low-income families hit 14.5 percent last year, and called for ``single-digit’’ inflation in the coming years.

The “vast” spending goals which Putin presented can’t be achieved while bringing inflation below 10 percent this year, Evgeny Nadorshin, senior economist at Moscow-based Trust Bank, said in an e-mailed note. “Carrying them out would hardly allow the government to truly concentrate on fighting inflation this year, as well as in the longer term.”

The energy industry produced more than two-thirds of Russia’s export earnings and more than a third of the state’s 2007 revenue, which totaled $325 billion.

“To stimulate growth in oil production and refining, the time has come to take a decision on reducing the tax burden on this sector of the economy,” Putin said.



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