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. Last Updated: 07/27/2016

Kasyanov Orders Budget Changes

With an eye to a visiting delegation from the International Monetary Fund, Prime Minister Mikhail Kasyanov on Monday ordered the government's budget for this year reworked to include payments on Soviet-era debt.

Kasyanov, speaking at a meeting with deputy prime ministers and key ministers, asked Finance Minister Alexei Kudrin to prepare amendments to the budget for an extraordinary government meeting, scheduled for Feb. 13.

"I ask you to complete preparation of the law on amendments to the budget. … I do not think it will be difficult. Within two days I ask you to submit [the changes to the government]," Kasyanov said in televised remarks.

The current budget does not provide for about $3 billion owed this year to the Paris Club of creditor nations. Budget changes must be approved by parliament.

Kasyanov made his comments on the first day of talks between Russia and a high-level IMF delegation led by Gerard Belanger, chief of the Fund's 2nd European Department. According to the Paris Club charter, Russia needs an IMF nod of approval for its economic policy before it can ask the club to reschedule the debts, which total about $38.7 billion.

The government said in January it could make only partial foreign debt payments this year due to scarce funds and domestic priorities. But the Paris Club urged Russia to pay in full and Kasyanov said later that the budget needed to be changed.

At the end of January, Kudrin said Russia had enough funds for the debt payments this year and the government would fully service the debt and try to make missed payments soon.

Alexander Zhukov, head of the budget committee of the State Duma, told Ekho Moskvy radio that the government needed budget changes to pay about $1.5 billion to the Paris Club in the first quarter.

He also expected an increase in revenues to help make payments later in the year, but he still held out hope of a restructuring deal.

"Talks with the Paris Club continue and it is possible we will be able to receive some rollover in payments," Zhukov said.

However, former First Deputy Finance Minister Oleg Vyugin, now vice president of Troika Dialog brokerage, told Ekho Moskvy that Kasyanov's order signaled the government had given up trying to win a restructuring this year.

"There will not be a restructure of the debt, at least not this year, and there will be no negotiations on it," he said.

Vyugin said the government could raise $5 billion to $6 billion in extra revenues this year under favorable circumstances such as high oil prices.

Kasyanov said the government should consider three sources for additional budget revenues — improved tax payments, privatization proceeds and domestic market borrowing.

(Reuters, AP)