Russian budget sweetens IMF

Click to follow
The Independent Online
Moscow - The prospect of Russia being granted a crucial $6.3bn (£3.9bn) loan from the IMF increased greatly yesterday after the lower house of parliament passed the 1995 budget, Reuter reports.

Deputies approved the draft at a third reading by 268 votes to 93 with three abstentions as the latest talks between Russia and the IMF began in Moscow. A final reading is required but is seen as a formality.

The budget foresees expenditure of 248 trillion roubles (£35.8bn), revenues of 175 trillion roubles (£25.15bn) and a deficit of 73 trillion (£10.7bn), equivalent to eight per cent of gross domestic product. The IMF, which has lent Russia $4bn, has linked approval of the standby loan to passing and sticking to a tight budget.

A Western diplomat said the vote "combined with Yeltsin's veto of the minimum wage bill has put the budget in very good shape for the IMF negotiations. The standby would be an important source of non-inflationary financing and is a critical contributor to bringing down inflation in Russia and stabilising the economy".

President Yeltsin on Thursday rejected a draft law which would have more than doubled the minimum wage, saying it would cost Russia an extra 159 trillion roubles (£23.27bn).

Russia's military campaign in Chechnya has raised questions about whether Moscow should receive further foreign loans.