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. Last Updated: 07/27/2016

Revenues Assume $6Bln in Lending

Russia plans to increase its foreign debt burden by another $5.9 billion next year, borrowing from the International Monetary Fund, the World Bank, foreign governments and commercial banks, according to the 2000 budget tentatively approved Tuesday by the State Duma.

In total, Russia will borrow $4.3 billion from international lending agencies, $500 million in untied loans from foreign governments and $1.1 billion in tied loans from foreign governments and commercial banks.

The government has earmarked $5.3 billion for service of foreign debts next year, which implies that foreign debts will grow by net $600 million.

But Russia's foreign debts in fact will grow at a much higher rate, which could become a problem if part of the Soviet-era debts are converted into Eurobonds.

"[Soviet-era] debts continue to grow because Russia does not pay and missed interest payments are included in the total amount of the outstanding debt," an official at a Western embassy in Moscow said.

At the end of 1998, Russia's sovereign debts amounted to $48.1 billion, while Soviet-era debt was worth $95.1 billion.

Germany remains Russia's major cash cow with debts totaling $24.3 billion at the end of last year.

By the beginning of the year 2001 Russia will owe Germany $28.8 billion mostly due to recapitalization of interest. Japan will come in second in the list of creditors with a total debt of $4.4 billion and the United States will be No. 3 with debts of $4.2 billion.

However, there appears to be a consensus in top political circles in Moscow that Soviet-era debts should not be paid at all.

All of the major political parties - Fatherland, the Communists and Yabloko - suggest that the bulk of Soviet-era debts should be written off and only a small chunk of them restructured.

The government has also taken a very pragmatic stance and has already defaulted twice on Soviet debts over the last 10 years.

Investors, meanwhile, are not sitting back as they await their money.

Earlier this year, several holders of the London Club debt in the United States grouped together and several times threatened to put the Russian government in default.

Several angry domestic creditors sued the government this fall on MinFin bonds, issued in the restructuring of Vneshekonombank's debts.

Even assuming that the Russian government can keep the angry creditors at a distance, there is no guarantee that the International Monetary Fund will steadily disburse loans.

To date, Russia has received $1 billion less than expected from its foreign creditors, government officials said.