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. Last Updated: 07/27/2016

Kasyanov: Economy Won't Flourish Soon

Russia's economy needs at least three years to fully bounce back from the August 1998 financial crisis, and it will take several years for the battered ruble to make a turnabout, First Deputy Prime Minister Mikhail Kasyanov said over the weekend.

"Our economy is weak," Kasyanov said Sunday on RTR television. "According to our forecasts, it will unfortunately take three to four years to restore the economy to its former level, to the achievements of the market economy we managed to get in 1997."

The ruble will only begin to appreciate against the dollar in five to seven years, he said.

Russia for the first time posted moderate economic growth in 1997, but the devaluation of the ruble and default on some government debt in August 1998 brought the economy to its knees. The economy rebounded by 1.5 percent last year, Kasyanov said.

Kasyanov, who also holds the post of finance minister, was appointed to the helm of the Russian economy by acting President Vladimir Putin earlier this month. Kasyanov has been a lead negotiator with the London and Paris clubs in talks to restructure Russia's $70 billion debt.

Kasyanov said although he was hopeful that the economy would post more growth this year, the Kremlin's focus on presidential elections in March would probably prevent any economic reforms in the first quarter.

Some economists, however, showed more optimism Monday than Kasyanov had over the state of the economy. Troika Dialog said it estimates that the economy may have grown by 2 percent last year and could grow by 2 percent to 3 percent in 2000.

"We assume that Kasyanov cannot be more optimistic about economic growth than he is, since optimism would lead to a less favorable position in talks on the restructuring of the $70 billion debt to the London and Paris clubs," Troika Dialog said in its daily report.

In another economic development, Kasyanov assured the West on Saturday that Russia would repay $3 billion in foreign debt coming due the first quarter of 2000.

The $3 billion in payments will go to service Russian Eurobonds floated in 1996 and 1997 and loans from the International Monetary Fund and the World Bank, Kasyanov said. Funds will come out of excess revenues pouring into the federal coffers thanks to increased tax collection rates and higher global oil prices, he said.

Russia had been counting on a $4.5 billion loan package approved by the IMF last summer to help make it through debt obligations this year. But the IMF has frozen the credits since September, when a $640 million tranche had been due, saying the nation was not meeting the strict economic targets the two sides had agreed on.

The $4.5 billion credit would have been just enough for Russia to pay its loan obligations to the IMF this year.

An IMF mission is expected to arrive in Moscow on Jan. 25 to discuss unfreezing the loan. However, Russia should not expect the negotiations to yield any financial reward, IMF managing director Michel Camdessus said Saturday.

"I shall be sending a technical mission to Moscow to establish where they [Russia] stand and what new goals they should set themselves for the next three months, six months or the coming year, so as to keep our program alive," Reuters reported Camdessus as saying on Radio France Internationale.