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. Last Updated: 07/27/2016

Kasyanov: $5Bln Surplus to Go for '03 Debt

Prime Minister Mikhail Kasyanov said Monday the government plans to set aside $5 billion this year to cope with a 2003 peak in foreign-debt payments, helped by a tough budget policy.

Kasyanov, speaking to an investment conference, also said that the government plans to raise a similar amount -- 150 billion rubles ($5.1 billion) -- in domestic bonds, including short GKO bonds and long OFZ bonds, in 2002.

"The volume of domestic financial instruments will be seriously increased next year," Prime-Tass quoted him as saying.

He also said the government and Central Bank were working on banking reform, which they saw as a major priority.

On debt repayments, Kasyanov said Russia was busy building the necessary funds.

"If we manage to accumulate this $5 billion, then the 2003 payment tension will be lifted," Kasyanov was quoted by the government information office as saying.

He was referring to $19 billion Russia is to disburse in foreign-debt payments and servicing in 2003, compared with around $14 billion this year and next.

He said a planned budget surplus of 1.5 percent of gross domestic product this year would help with this goal and insisted a ratio of 60 percent of foreign debt to gross domestic product was on a "normal, European level."

Russia's coffers have been filled in the last two years by high prices for its main exports of oil, gas and metals, which has given the government breathing space to implement structural reforms and pay down debt.

Kasyanov said confidence was returning to the economy as a whole and that the government would in the future focus on supporting industry, which has grown by about one-third since the 1998 economic crisis.

"The problems brought by the 1998 [crisis] have been overcome," he said. "For the first time households and businessmen are talking about the future with confidence and are planning budgets not for three months but for years ahead."

Kasyanov said growth was no longer due to export revenues, but due to consumer and investment demand.

He said the government had to find ways to channel billions of dollars of under-the-mattress household money into the economy by changing pension and mortgage legislation.

Kasyanov said the government would make reforms in the bank sector a priority in order to support economic growth, and the Cabinet and the Central Bank would soon agree on a draft plan.

Analysts and investors have long criticized the government for dragging its feet on reforming banks, which are seen as failing to perform properly as borrowers and lenders.