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. Last Updated: 07/27/2016

Kasyanov to Fight for Budget

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Prime Minister Mikhail Kasyanov pledged Saturday to defend his Cabinet's 2002 budget, the first in the post-Soviet period with a surplus, against skeptics in parliament.

Kasyanov, at an informal meeting with foreign journalists, also said Russia would welcome restructuring of its $42 billion debt with the Paris Club of creditor nations, but had no intention of negotiating changes with the West.

He foresaw no big overhaul in prospective Cabinet changes, but wanted to boost efficiency and ministerial responsibility.

Kasyanov, who spoke on condition that he not be quoted directly, denied suggestions that ministers had "expected a miracle" in drafting a budget calling for increased pensions and public sector wages to boost meager living standards.

He said the budget had a pragmatic approach to income and expenditure and promised to meet foreign debt commitments. Ministers would be tough but flexible in implementing decisions.

The real miracle, he said, would be if the State Duma passed the document without resistance in the fall. The mentality of deputies had to be altered to ensure passage.

The Cabinet gave approval in principle this week to the budget, with ministers noting warnings by President Vladimir Putin to boost pay for the military and keep to targets.

Finance Minister Alexei Kudrin said it allowed for a balanced economy and anticipated structural reforms and took account of external debt payments regardless of oil prices — critical for Russia's export earnings.

But Alexander Zhukov, head of the Duma budget committee, predicted a fight over the planned 1.26 percent surplus. He suggested inflation estimates of 12 percent to 13 percent were too low given many predictions that it would hit 20 percent this year.

"There will be arguments from deputies about the surplus: Why should we pay debt out of the budget when the majority of countries in the world cannot afford to do this?" he told a briefing Friday. "Why should we not refinance debts or borrow from the Central Bank?"

Kasyanov said the West had treated Russia unfairly in the post-Soviet period compared to other debtors, given the huge democratic and economic changes the country had undertaken.

He said Russia had been twice deceived by the West in recent years — when G-8 industrial countries went back on informal pledges to provide debt relief and the suspension of International Monetary Fund credit programs.

The prime minister, who last year renegotiated Russia's London Club debt to commercial creditors, said he had been consistent in seeking to ease the debt burden.

If Paris Club creditors offered Russia rescheduling, Moscow would not refuse it, Kasyanov said, but talks on this were pointless as the issue was political. Russia could proceed without either rescheduling or resumed IMF credits if necessary.

Kasyanov told reporters to expect no major changes in a government reshuffle, the subject of months of rumors. He said the government could manage if the number of deputy prime ministers were cut from five to three — as has been widely predicted by journalists and analysts.

Kasyanov said earlier this week the government reshuffle had been delayed for two weeks. It had previously been scheduled to take place June 7 after a Cabinet consideration of the 2002 draft budget.

He made no suggestions Saturday on which of the five might be removed or which ministries could change hands. He cast doubt on the possibility of his own resignation — widely rumored until recently — but said he could not predict future events.

Kasyanov wanted a Cabinet in the "Western mold" with ministers given more responsibility and decision-making powers.