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. Last Updated: 07/27/2016

BUSSINESS WEEK IN REVIEW: december 13 to 19

Loans In, Loans Out

The World Bank approved two loans for Russia on Friday, a $800 million structural adjustment loan and another $800 million loan for the coal sector.

After the International Monetary Fund's decision early in the week to release a $700 million loan installment to Russia, First Deputy Prime Minister Anatoly Chubais said the country is out of the woods after the recent world market crisis.

Rating agency Standard & Poor's downgraded Russia's credit rating outlook for 1998 from "stable" to "negative" Friday, sending the stock market down 6 percent and signaling more expensive borrowing for Russia next year.

Gas giant Gazprom canceled a $750 million financing agreement with the U.S. Export-Import Bank, blasting the conditions the U.S. side placed on the loan.

Budget Steams Along

The State Duma's budget commission recommended Friday the chamber approve the 1998 budget in its second reading.

The Duma approved plans to raise the limit of foreign borrowing for 1998 to $10.9 billion, from the proposed level of $9.8 billion, and adopted nine new tax bills Thursday and Friday aimed at bolstering the budget as a stopgap measure after it rejected the government's tax code.

Oil Maneuvering

A Moscow arbitration court has frozen 51 percent of shares in the oil company Sibneft, owned by financier Boris Berezovsky, in response to a suit brought by an Uneximbank subsidiary which was barred from an investment tender for the stake.

The Menatep-Rosprom-Yukos group will join with Berezovsky's Sibneft and seek a foreign partner to bid in the upcoming Rosneft oil company privatization, Rosprom head Mikhail Khodorkovsky was quoted as saying by the Financial Times. Chubais said Friday the details of the Rosneft sell-off will be determined by the end of the year.

Tyumen Oil Co. won two small victories, including the appointment of an outside manager, against its defiant subsidiary, Nizhnevartovskneftegaz, and its director Viktor Paly.

Prime Minister Viktor Chernomyrdin, celebrating his fifth anniversary as premier last week, reversed recent a decision by Chubais' VChK emergency tax commission to seize the assets of the Omsk and Angarsk refineries until back taxes were paid.

New Flows

In Turkey, Chernomyrdin signed an accord on delivering natural gas to Turkey over the next 25 years, worth an estimated $20 billion. The deal involves building a pipeline from Russia to Ankara, which will pass beneath the Black Sea.

Russia is set to increase its oil production this year for the first time in a decade, the Fuel and Energy Ministry said, about 1 percent over 1996 but far off 1987 levels.

EU Warming

The European Commission has called for more flexibility in the European Union's anti-dumping policy against Russia. The EU has heretofore classified Russia as a non-market economy, which sets into effect alternative and often higher anti-dumping tariffs.

Russia welcomed an EU decision to take new members from former communist Eastern Europe, hailing it as the basis of continent-wide economic cooperation in the next century.

Squaring Off

Swedish forestry group AssiDoman said it is withdrawing financial support from the money-losing Segezhabumprom paper and pulp mill in Karelia, criticizing Russia's bureaucracy and unclear tax system.

The owners of cable provider Kosmos TV lost another battle for control of the company on Tuesday after an appeals court upheld a judge's order reinstating Alexander Lapshin as general director. The renegade director skipped a reconciliation meeting with the owners Wednesday, demanding they provide proof of ownership in Kosmos; the owners say those documents are locked in Lapshin's office.

Alcohol importers and producers have protested to Moscow Mayor Yury Luzhkov against a plan to require bar codes for all bottles of wine and spirits sold in Moscow, which they say would require moving stocks through city-selected warehouses and would increase costs by $2 a bottle.