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Russia: Reducing Debt Becomes Government's Top Priority

Moscow, 7 May 1998 (RFE/RL) - The new streamlined Russian government today discussed budget plans for the next three years, in line with President Boris Yeltsin's call for tight fiscal discipline to ensure economic growth. Prime Minister Sergei Kiriyenko and Central Bank Governor Sergei Dubinin said budget plans had to be based on the most pessimistic scenario for Russia's economic development.

Kiriyenko made clear that reducing state debt -- both domestic and foreign -- was the government's number one priority.

Kiriyenko was quoted by the RIA news agency as saying that the solution of the debt problem was no less important than the suppression of inflation, since it "may hit the economic independence of the country." He said there was no alternative to cutting the debt. Russia's foreign debt totals about $120 billion, while outstanding domestic debt amounts to about 370 billion roubles ($60 billion).

The government also decided to cut the excise duty on the sale of crude oil from 55 to 45 rubles ($9 to $7.50) per metric ton by the end of the year. The measure, designed to cushion the impact of falling world oil prices, will reduce Russia's tax revenue by some $426 million. The International Monetary Fund (IMF) has opposed the move, saying it will hurt financial stabilization. The measure needs parliamentary approval.

First Deputy Finance Minister Vladimir Petrov announced that Russia plans to stop borrowing money from the IMF by 2000.