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Russia: Government Finally Approves Budget

Moscow, 10 December 1998 (RFE/RL) - The Russian government today approved the much delayed 1999 draft budget and will now submit it to parliament for endorsement. Prime Minister Yevgeny Primakov said the draft is harsh but honest because the government has not included spending that cannot be covered by revenues. Primakov also said the budget will help Russia "breathe easier in the future" and not be dependent on foreign credits.

First Deputy Prime Minister Yuri Maslyukov said that at a meeting today the cabinet made some unspecified "amendments" to the budget, which is intended to bring Russia's economy out of its crisis.

Finance Minister Mikhail Zadornov told a news conference later that Russia's very existence depends on its ability to cut foreign debt payments. He said Russia intends to service its debt, but counts on the understanding of creditors in the restructuring of both the domestic and foreign debt. Moscow has already said it cannot pay back all of the $17.5 billion in foreign debt payments which are due next year. Zadornov said the budget includes just more than half of the foreign debt servicing.

Zadornov also acknowledged the budget includes $7.5 billion in foreign loans that are yet to materialize. The International Monetary Fund, which suspended payments on an aid package earlier this year, has warned the government against factoring in foreign credits that have still not been granted.

The budget draft discussed today forecasts a deficit of about 101 billion rubles ($5 billion), which the government expects to cover partly by printing more rubles.

Primakov said that if it is approved, the budget could lead to economic growth by creating new incentives for Russia's industries. Duma Speaker Gennady Seleznyov, however, has said parliament is unlikely to pass the budget before the new year.