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. Last Updated: 07/27/2016

Federation Council Approves Funds for Paris Club

Russia's upper house of parliament, the Federation Council, Wednesday approved amendments to the 2001 budget, aiming to allow the government to service due debt to the Paris Club of creditor nations in full.

The government, hoping to restructure the $40 billion Soviet-era debt, had initially provided for just $1.3 billion for foreign debt payments in the 2001 budget.

But Russia has so far failed to reach a restructuring agreement with the Club which is due to receive $3.8 billion from Moscow this year.

The Federation Council approved government's amendments which say that Russia would get an additional 165 billion roubles ($5.5 billion at the expected 2001 average rate of 30 roubles per dollar) from exports of energy and metals.

The first 41 billion roubles of the extra revenue will go towards foreign debt repayment, while the remaining 124 billion roubles will be split in half between foreign debt and social programmes.

"The government has reached a necessary compromise on the foreign debt issue as well as the prospects of regions' social development," Deputy Prime Minister and Finance Minister Alexei Kudrin told the chamber which consists of regional leaders.

"The results of the first quarter show we can have both stability and service foreign debts in accordance with the schedule."

Under the original 2001 budget, the first 70 billion roubles in extra revenues were to be split in half between foreign debt and domestic needs. Funds above the sum were to be split in a 70 per 30 proportion between debts and social programmes.

The approval of the Federation Council came after the State Duma lower house last month approved the amendments. The changes must be signed by the president into law.

The Duma last month rejected government's proposals to lift a ban on privatisation of large companies revenues from sale of which were also supposed to go towards foreign debt servicing.

The government will consider an amended privatisation proposal Mar. 15.