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. Last Updated: 07/27/2016

Kasyanov: Economy Great but Debt Deal Needed

Prime Minister Mikhail Kasyanov says this year will show record post-Soviet economic growth levels, a huge trade surplus and surging domestic and foreign investment. Nevertheless, he says, the country still won’t be able to pay its debts next year without a restructuring deal.

He said the government hoped the IMF, which is due to send a mission to Moscow in January, would decide whether or not Russia needed a reduction in its $48 billion debt to the Paris Club of creditor nations.

"I think that in January our positions will become closer and the IMF will confirm Russia needs debt relief," he said.

The previous mission left Moscow in November without issuing any recommendations. The main stumbling block was different estimates of 2000 prices for oil, Russia’s main export.

Russia cannot start negotiations with the Paris Club, to which it is due to pay $3 billion next year, without an agreement with the IMF.

"The problem must be solved in the nearest future, because Russia will not be able to find $3 billion," Kasyanov said.

The economy, largely dependent on exports of oil and gas, has been boosted by high international energy prices and the positive effects of a ruble devaluation after the 1998 financial crisis.

"The year 2000 was a special year. Political stability has created conditions for the economy to move forward. My evaluation of the economic development is positive," Kasyanov said recently.

Gross domestic product, which rose 3.2 percent in 1999, is expected to rise 7 percent this year, while industrial output would increase by 9.5 percent compared with an 8.1 percent rise last year.

"The main factor behind industrial growth is widening domestic demand, demand for investment," Kasyanov said, adding domestic investment had risen 17 percent to 19 percent compared to 1999.

Foreign investment had risen 20-22 percent to $8 billion, with about half of it going to industry. Household real incomes had grown 9.5 percent, he said.

Kasyanov said most growth was in the light, medical, printing, metallurgy and machine-building industries. Barter had fallen to 20 percent from 60 percent two years ago.

Kasyanov said the trade surplus would hit a 10-year high of $60 billion, with exports $102 billion and imports $42 billion.