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. Last Updated: 07/27/2016

Government Wins 2001 Budget Vote

The government won a parliamentary battle over budget amendments Thursday, easing fears of a foreign debt default and striking a blow against Communist opponents.

After a heated debate that ended with Communists storming out in protest against government privatization plans, the remaining deputies voted overwhelmingly for proposals to direct more funds toward debt servicing.

"The main task was to prevent the country falling into technical default," Alexander Kotenkov, the president's representative in the State Duma, told reporters after the vote.

The measures still need clearance from the Federation Council and President Vladimir Putin's signature, but their approval by the Duma marks a victory for the president in his first real battle with the chamber since taking power in December 1999.

The Communists, who failed in an effort to get the debate on budget amendments struck from the day's agenda, are now likely to be even more determined to push for a vote of no confidence in Prime Minister Mikhail Kasyanov's government.

The only consolation for the Communists and their left-wing allies was the Duma's rejection of a government proposal to lift a ban on major privatizations imposed last year pending a new law on state sell-offs.

The government hoped to raise 15 billion rubles ($523 million) from privatizations as part of efforts to cover a budget shortfall of about 183 billion rubles to meet foreign debt obligations.

But Finance Minister Alexei Kudrin refused to admit the privatization plan was dead.

"We had to make a decision today, giving ground on the privatization question. We will introduce [privatization proposals] separately," Kudrin told reporters after the vote.

Kotenkov said the government will probably return to the privatization question in March: "The task is completed, though not quite 100 percent."

Kudrin said that even without the privatization revenue, the amendments would allow the government to pay the Paris Club of creditor nations $620 million owed by the end of February, as well as meet social needs Communists say are being neglected.

"As a whole, the law allows us to guarantee social spending and preserve the reputation of the country as a solvent borrower," Kudrin said.

Under the compromise proposals approved by the Duma, the first 41 billion rubles in extra revenues will go toward paying interest on foreign debt. For sums greater than this, the split will be 50-50 between debt and other spending.

Kudrin said conservative estimates foresaw extra revenues garnering about 108 billion rubles, mostly generated by higher-than-expected oil and gas revenues.