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. Last Updated: 07/27/2016

State Asset Sales to Slow in '06

Russia plans to raise 31 billion rubles ($1.1 billion) next year in state asset sales, reducing its revenue target for a second consecutive year as record oil prices boost the government's tax inflow.

The asset sale program was announced Tuesday in Rossiiskaya Gazeta.

It plans to offer stakes in companies including 34 percent of KamAz, a truck maker based in the republic of Tatarstan, and a 20 percent holding in the Tula Weapons Factory, which makes firearms for sport shooting and hunting rifles. The KamAz stake is worth $160 million, based on the company's share price.

Russia plans to raise more than $1.4 billion this year from asset sales, less than half of the revenue received in 2004.

Revenue in Russia, the world's second-largest oil producer, is surging as oil trades at record prices, allowing the government to raise domestic spending and pay off foreign debt ahead of schedule.

The 2006 asset sale plan also calls for the sale of a 46.5 percent stake in Samara Airlines. The proposal will require approval from the State Duma.

"The state should exit those businesses where its presence is ineffective; this is what privatization is for at this stage," said Yelena Matrosova, a BDO Unicon economist, adding that it "gives a boost" to economic development as asset sales help strengthen competition.

The government is due to repay $13.3 billion in foreign debt in 2006, compared with $17.7 billion in 2005, she said.