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Prime Minister Vladimir Putin called for restructuring a network of regional and local authorities and stopping their enlargement.

He said the growing number of regional and municipal officials and a result the growth of administrative expenses remained one of the serious problems in Russia.

"We could see this tendency even in the first half of 2009, when the crisis was at its peak. That's totally wrong," Putin said at a meeting of the government commission on regional development.

He said administrative expenses at the federal and municipal levels had increased by 30 percent in 2008. The growth in 2009 was not as big - 4 percent -- because of the crisis. "But still there was a growth, and this at a time of crisis, when we try to economise wherever possible. I flatly reject references to new tasks. This network should be restructured," Putin said.

He also said that ineffective administrative expenditures were unacceptably big and had exceeded 116 billion roubles in 2008.

Putin urged regions to live according to their means and stop inflating budget expenditures.

Consolidated regional and municipal budget expenditures in 2009 increased by 4 percent and in some regions by more than 25 percent, Putin said at a meeting of the commission on regional development.

He noted that many regions are increasing public administration and other such expenditures. "On the whole, consolidated regional and municipal budget expenditures for administrative bodies in 2009 increased by 4 percent, and in some regions by more than 25 percent," the prime minister said, adding that the growth was 38 percent in the Magadan region, 30 percent in Ingushetia, 25 percent in the Nizhny Novgorod region, 27 percent in Moscow, and 24 percent in Adygeya.

"The following arguments are put forth: the overall workload for the administrative personnel is increasing and money is needed for the work of anti-crisis groups, monitoring and other additional functions. New funding is secured for such tasks," Putin said.

"Anti-crisis management should be ensured by way of internal redistribution of resources and personnel, saving in less important areas rather than by inflating staffs and budgets," he added.

Only officials in Ingushetia could account for such growth. Until recently legislation allowed civil servants in Ingushetia to be underpaid for special conditions of work, Ingush government chief of staff Ayub Gagiyev said. Under federal legislation, the extra pay may be as big as up to 200 percent of the base salary, but did not exceed 50 percent in the republic. "We have brought the extra pay in line with federal legislation. As a result, civil servant expenditures have increased since May of this year," he explained to the business daily Vedomosti.

"The second factor behind the growth of administrative expenditures is that the minimum wage is 4,330 roubles since January 1. But before that many categories of civil servants received less, and we have to obligate all governmental institutions to pay salaries that at least match that amount. The number of government officials in the republic has decreased from last year by 5 percent to about 1,000 people."

Putin urged regions to live according to their means.

Kudrin said earlier that the optimisation of administrative expenditures in Russian regions was inevitable.

"Today's signal sent to regions by the chairman of the government will be taken into account," he said.

The minister said the regions that fail to optimise administrative expenditures would get small aid.

According to the minister, travel, repair, purchase and automobile expenses would be cut by 15 percent in 2010.

"When drafting the budget for 2010 we sharply reduced ministerial and departmental expenditures," Kudrin said.

Administrative expenditures were cut by 30 percent in 2009 and will be cut by another 15 percent in 2010. "The overall reduction will exceed 40 percent," the minister said.

According to an FBK survey, combined administrative expenses in the first six months of the year increased by 3.8 percent in regions and by 16.4 percent at the federal level.

Due to the crisis, budget revenues are plummeting, but expenditures, primarily administrative ones, are growing.

Combined administrative expenses in regional budgets in the first six months of 2009 exceeded last year's indicator by 3.8 percent. But federal administrative expenses grew much faster at a rate of 16.4 percent in the same period.

The director of FBK's Department of Strategic Analysis, Igor Nikolayev, believes that the federal government's complaints that regional authorities are inflating administrative expenses seem to be unjustified. It's the other way round: the federal government appears to be much less modest.

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