OREANDA-NEWS. July 09, 2009. Event: Russia's Finance Ministry expects the federal budget deficit to reach 6.5% of GDP in 2010, according to Thursday's Vedomosti. The Ministry is looking to increase fiscal revenues and is considering additional taxes, an increase in MET, higher customs duties on gas, higher excise taxes on motor fuel and motor oil, as well as tax hikes in excise taxes on alcohol and tobacco, reported the press-centre of OTKRITIE FC.

View: We believe that tax increases would have a negative impact in the currently weak economic environment, but being equal to ~0.7% of GDP will not solve the problems of the huge budget deficit and evaporating reserve funds. From our standpoint, such measures, especially increased gasoline taxes, would be inflationary. We also see that increased inflation and a higher budget deficit would put pressure on the ruble and believe that the devaluation scenario is still very likely.