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. Last Updated: 07/27/2016

Cabinet to Aim for Balanced 2003 Budget

Finance Minister Alexei Kudrin said Friday the government would aim for a balanced 2003 budget, but could borrow to cover any gaps if its own revenues fell short.

But he stressed the 2002 budget had been drawn up to help overcome a peak in foreign debt payments in 2003, amounting to around $19 billion. He warned that a failure to plan properly for the debt payments could cause a "sharp devaluation."

"The position we aim at is a budget without a deficit in 2003," he said during a meeting at the Finance Ministry.

The meeting was attended by parliamentary leaders as the government is currently discussing the 2002 draft with the State Duma.

"The government is looking at various options, but even if things go badly, the government has other ways to cover a deficit, particularly foreign borrowing," he told reporters.

He said if the price of key oil exports was $23.50 a barrel, that would give Russia a budget surplus of 126.6 billion rubles ($4.30 billion) in 2003. If it was $18.50, there would be a deficit of 41.1 billion rubles.

He said external borrowing in 2003 could be 331.2 billion rubles if the economic situation turns out worse than expected. The Russian government has in recent years made a practice of drawing up such "what if" economic outlooks when considering its budget plans. The oil price is particularly key as production and exports of crude, metals and gas account for roughly three-quarters of the country's gross domestic product.

Kudrin said the 2002 budget was aimed at helping Russia build a war chest of reserve revenues to meet 2003 repayments.

"Everyone knows that 2003 sees a peak in payments. If we cannot plan how things develop then the risks for the economy mount, maybe there will be a sharp devaluation," he said.

The budget surplus next year is expected to hit 126.5 billion rubles. Kudrin said the 2003 forecast for the ruble was an average rate of 32 per dollar, versus an expected 31.5 in 2002 and 30 this year.