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. Last Updated: 07/27/2016

'96 Budget To Mirror Aims of '95

Russia's 1996 budget, discussed for the first time Thursday, will retain key principles from 1995, keeping the deficit low and using non-inflationary means to close the gap, a deputy finance minister said.

Itar-Tass quoted Vladimir Petrov as saying that the draft envisaged a deficit of 76 trillion rubles ($15 billion) or 4 percent of gross domestic product. Ministers hope to keep the 1995 budget gap to 5 percent of GDP.

Petrov said domestic securities would be the most important source of finance in 1996, raising 40 trillion rubles.

The government also hoped to receive 23.4 trillion rubles from international financial institutions and 7.6 trillion of other loans.

Central Bank deals on the secondary security market would bring in five trillion rubles.

The draft budget also envisages 1996 debt repayments of $8.5 billion, up from $6.4 billion this year. Heavily indebted Russia has been seeking extra time to repay debts inherited from the former Soviet Union and has won several rescheduling deals.

Defense spending would hold steady at 21 percent of overall expenditures, while subsidies for agricultural, energy and technology sectors would continue, Interfax reported.

Petrov also said Russia planned major changes to the tax regime next year to relieve the burden on producers.

He said Russia would also continue to allow free trade in the ruble currency.

The government opened discussions of the budget Thursday. The plans must be approved by the government and then by both houses of the Russian parliament before they can be adopted.

In Soviet days the government used inflationary central bank loans to close the budget gap, but such credits were banned this year.

Last year, industrial production fell 21 percent and GDP decreased by 15 percent.