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. Last Updated: 07/27/2016

Duma Starts Hearings on IMF Bills




Russia's lower house of parliament opened a session Wednesday to decide the fate of bills needed to secure vital loans from the International Monetary Fund and meet a huge debt bill.


The battle for passage of bills intended to increase budget revenues and restructure the banking system is a tough first test for Prime Minister Sergei Stepashin's new government in the opposition-dominated State Duma.


Underlining the importance the government attaches to winning support for the laws and easing the debt burden, Finance Minister Mikhail Kasyanov said: "Russia's liquidity is still very limited due to the difficult financial situation."


"Our intentions are very clear: We would not like to keep the situation uncertain for long," he said.


The Duma session is likely to last three days, with bank restructuring the first major law on the agenda and proposed tax increases expected to be debated Thursday or Friday.


The bill on bank restructuring was passed in its first reading although deputies disagreed with the status of a special agency set up to carry out the restructuring. The bill must pass three readings by the Duma, be approved by the upper house and then be signed by President Boris Yeltsin to become law.


Russia has been seeking urgent help from the IMF since it sank into a severe economic crisis last August.


In Amsterdam, Russian Central Bank chief Viktor Geraschenko said Wednesday that he is "optimistic'' that Russia will get a new loan from the IMF.


Speaking at a financial conference, Geraschenko said: "I'm keeping my fingers crossed that this will go through.''


Turning to the possibility of Russia itself going to the market for cash, Geraschenko said the central bank should be allowed to issue short term bonds in the wake of the government's default on treasury debt worth $40 billion last August.


Legislation for those kinds of securities are among the bills that the Duma is considering this week.


Yeltsin, however, sent a letter to the Duma on Wednesday criticizing the legislation, saying he was concerned that under the legislation government credits issued to crisis-hit commercial banks could be used to buy the securities. That would mean that on their redemption the Central Bank would be paying interest to banks on money it had given them in the first place.