Russian PM Tries to Win over Party Leaders for Western Debt Repayment
Russian Prime Minister Mikhail Kasyanov met party party leaders on Monday in a last-ditch bid to persuade them to drop their opposition to devoting all extra budget funds for a vital Western debt repayment deal.
On Friday the State Duma lower house of parliament's budget committee struck down the government's plan to amend the 2001 budget to channel 108 billion rubles (3.72 billion dollars) of additional revenues to service Russia's external debt.
On Monday it recommended that the Duma vote for its counterproposal -- which would keep aside just 41.2 billion rubles for debt repayments and thereafter split any extra funds 50:50 with domestic needs.
The government has until Thursday to decide whether to present its own, or the Duma committee's, version of the revised budget for a full vote.
Russia is under intense pressure from its foreign creditors to meet all its obligations and is due to repay about 3.5 billion dollars in Soviet-era debt this year.
After paying barely a tenth of its dues in January to the Paris club of creditor nations, 31.5 million dollars, Moscow is to pay around 500 million dollars on Tuesday, a source close to the government said cited by Interfax.
The 2001 budget as it exists now provides for only 300 million dollars in interest payments, as Moscow had counted on securing a deal to restructure its Soviet-era obligations.
On January 1, Moscow's debt to the Paris Club stood at 48.3 billion dollars (52.5 billion euros), of which 38.7 billion dollars was Soviet-era obligations.
The impasse with the Duma came as Kasyanov's embattled government suffered another reverse on Friday when the IMF refused to strike a new cooperation agreement.
The International Monetary Fund mission left Moscow without sealing a cooperation pact instrumental to Russia's efforts to delay payment on its mountain of Soviet-era debts.
Russia needs to win the IMF's approval before launching direct talks with the Paris Club on payments that have been under dispute for months as Moscow remains unwilling to face up to its Soviet-era obligations.
Russia owes 21.1 billion dollars to Germany, which threatened earlier this month to bar Russia from economic membership in the Group of Eight world leading powers should Moscow fail to honour its commitments.
On Monday a spokesman for the German finance ministry in Berlin denied a report in the Frankfurter Allgemeine Zeitung newspaper that Germany was preparing to take measures, notably concerning export credits, against Russia at the end of February for default of debt obligations. The spokesman said: "We are not preparing sanctions against Russia."
Rusian Finance Minister Alexei Kudrin failed on Saturday to soften the demands of Group of Seven leading industrialised nations (the G8 minus Russia) for Moscow to face up fully to its debt commitments at a meeting in Palermo, Italy – MOSCOW (AFP)
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