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. Last Updated: 07/27/2016


Deal on Debts

The Russian government and foreign banks came closer to a deal on debt restructuring this week, when a breakthrough occurred in the fourth round of talks. Both sides agreed not to link defaulted domestic bonds with forward currency contracts that Russian banks signed with foreign investors who put their money in the Russian T-bill market.

The National Reserve Bank said it wanted to issue bonds worth 20 percent to 30 percent of its capital to sale for foreigners if the Central Bank and Inkombank creditors approve its takeover of the defunct Inkombank.

The Interior Ministry arrested Unexim bank deputy board chairman Grigory Koshel on charges of theft of state property worth $27 million, as he was about to board a plane to Switzerland.

Duma Rejects Projects

The State Duma, parliament's lower house, rejected 10 oil exploration projects' requests for production-sharing agreements, striking a blow against foreign and domestic investment in the needy oil and gas sector. As before, the majority of Duma members believe these agreements, which would have brought Russia tens of billions of direct foreign investment, enable foreigners to steal the country's natural assets - although half of the latest proposed projects had only Russian participants.

Bids for 2.5 percent of Gazprom, the world's largest gas company, will be accepted until Dec. 18 and the results of the sale will be announced the next day, government officials said. The stake was expected to fetch at least $651 million.

Tyumen Oil, the country's fifth largest oil company, was seeking a strategic partner to buy an equity stake in the company. The sale could take place at the end of 1999 and the money would be used to raise working capital.

Banks Bailed Out

The Central Bank has issued billions of rubles in long-term loans to a restricted group of banks, a move that may revive the banking sector but could weaken the ruble and drive up inflation.

Moscow Mayor Yury Luzhkov and Nizhny Novgorod Governor Ivan Sklyarov signed an agreement to form a joint venture called Almaznoye Povorye, which would set up a production and trade center for diamonds in central Moscow.

Russia's major metal producer Norilsk Nickel planned to merge its three subsidiaries in the northwest Murmansk region into a single holding company under a cost-cutting program, which would streamline production without layoffs.

Credit rating agency Standard & Poor's boosted LUKoil's rating to CCC- from CC, marking the first S&P rating hike for any Russian issuer since the financial crisis began in August.

Insider Trading

The Prosecutor General's Office has seized Moscow Interbank Currency Exchange trading records in what analysts said was a sign that it is investigating allegations of insider dealing in the days before the August collapse of the treasury-bill market.

Kam-AZ, the country's largest and financially troubled truck manufacturer, might become effectively state-owned when shareholders approve a debt-for-equity swap that would wipe off most of the company's $1 billion in bad debt. Analysts said the deal is unfair to the company's shareholders and commercial creditors.

American steel executives complained to U.S. President Bill Clinton about a surge of imported steel from among others Russia, Brazil and Japan, which they accused of dumping the metal at low prices on the U.S. market.

Food Aid

Russian and U.S. officials signed a food aid deal worth hundreds of millions of dollars. The United States was to give Russia a donation of 1.5 million tons of U.S. wheat, 100,000 tons of other foodstuffs and a low interest loan of $600 million to be used to buy food from the United States.

Finance Minister Mikhail Zadornov clashed with tax chief Georgy Boos, when Zadornov claimed state tax income had dropped this year compared with last year while the tax chief said they were at the same level.

Moscow real estate developer Mosenka has said it will be filing suit in arbitration court in Stockholm to recover $3.5 billion in rent from Rinaco Plus, until recently one of the most successful Moscow brokerage houses.

India said that work on designing and preparing a detailed project report for construction of two Russian 1,000 megawatt reactors in India's southern Tamil Nadu state had begun.