In a message dated 8/20/99 5:23:39 PM Central Daylight Time, AOL News writes: << Subj: IMF Team Probes Russia's 2000 Budget Date: 8/20/99 5:23:39 PM Central Daylight Time From: AOL News BCC: Ahab42 IMF Team Probes Russia's 2000 Budget .c The Associated Press By ANGELA CHARLTON MOSCOW (AP) - A team of International Monetary Fund experts on Friday began studying the Russian government's 2000 budget draft, which analysts call impressively austere - so austere that the country is unlikely to make it work. The government finalized the budget Thursday and will present it to the lower house of parliament, the State Duma, next week. President Boris Yeltsin's government will likely face pressure from the Communist-led parliament to increase spending. With parliamentary elections in December and presidential elections next summer, politicians might also be tempted to boost spending. But Russia is under heavy pressure from the IMF, its biggest lender, to keep spending down and boost revenues, particularly its perennially poor tax collection. ``It's a reasonable budget, but the question is whether they will be able to adopt it, given that we're heading to a period with two elections,'' said John Orford, an economist at investment bank Robert Flemings in London. Orford and other analysts have said the 2000 budget envisages tight management of the government's resources and praised its low deficit target. The draft foresees a deficit of 1.1 percent of gross domestic product, down from 2.5 percent in this year's budget. The Duma must pass it in four readings, a process that traditionally takes months. Meanwhile, Russia's economy continues to be plagued by the fact that many companies opt to barter with suppliers and customers instead of paying bills, making it difficult to tax business transactions. That's translating into huge losses for tax coffers, said Sergei Prudnik, analyst at Moscow brokerage Troika Dialog. Also, investors, domestic and foreign, continue to withdraw money from Russia as long as Yeltsin changes prime ministers every few months and the army is enmeshed in a military conflict with Islamic guerrillas on its southern border. ``The question is when is Russia going to be able to restore confidence in the economy,'' Orford said. ``You need massive investment, and to get that you need to put in place a stable system.'' The government is pinning its hopes on higher oil prices, analysts said. With oil and gas companies generating the bulk of Russia's budget revenues, higher oil prices have helped raise tax collections. The IMF experts are in Moscow through Sept. 1 to study the budget and whether Russia has met requirements for another installment of a $4.5 billion loan package. Russian officials have said they expect a $640 million installment in September. Russia needs the money to keep servicing its massive foreign debts. AP-NY-08-20-99 1822EDT Copyright 1999 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without prior written authority of The Associated Press. Announcement: America Online has added Reuters newswires to News Profiles. To add Reuters articles to your daily news delivery, go to KW: <A HREF="aol://5862:146">News Profiles</A> and click on "Modify Your News Profiles." Then click "Edit" and add Reuters from the list on the left. To edit your profile, go to keyword <A HREF="aol://1722:NewsProfiles">NewsProfiles</A>. For all of today's news, go to keyword <A HREF="aol://1722:News">News</A>. >>
IMF Team Probes Russia's 2000 Budget .c The Associated Press By ANGELA CHARLTON MOSCOW (AP) - A team of International Monetary Fund experts on Friday began studying the Russian government's 2000 budget draft, which analysts call impressively austere - so austere that the country is unlikely to make it work. The government finalized the budget Thursday and will present it to the lower house of parliament, the State Duma, next week. President Boris Yeltsin's government will likely face pressure from the Communist-led parliament to increase spending. With parliamentary elections in December and presidential elections next summer, politicians might also be tempted to boost spending. But Russia is under heavy pressure from the IMF, its biggest lender, to keep spending down and boost revenues, particularly its perennially poor tax collection. ``It's a reasonable budget, but the question is whether they will be able to adopt it, given that we're heading to a period with two elections,'' said John Orford, an economist at investment bank Robert Flemings in London. Orford and other analysts have said the 2000 budget envisages tight management of the government's resources and praised its low deficit target. The draft foresees a deficit of 1.1 percent of gross domestic product, down from 2.5 percent in this year's budget. The Duma must pass it in four readings, a process that traditionally takes months. Meanwhile, Russia's economy continues to be plagued by the fact that many companies opt to barter with suppliers and customers instead of paying bills, making it difficult to tax business transactions. That's translating into huge losses for tax coffers, said Sergei Prudnik, analyst at Moscow brokerage Troika Dialog. Also, investors, domestic and foreign, continue to withdraw money from Russia as long as Yeltsin changes prime ministers every few months and the army is enmeshed in a military conflict with Islamic guerrillas on its southern border. ``The question is when is Russia going to be able to restore confidence in the economy,'' Orford said. ``You need massive investment, and to get that you need to put in place a stable system.'' The government is pinning its hopes on higher oil prices, analysts said. With oil and gas companies generating the bulk of Russia's budget revenues, higher oil prices have helped raise tax collections. The IMF experts are in Moscow through Sept. 1 to study the budget and whether Russia has met requirements for another installment of a $4.5 billion loan package. Russian officials have said they expect a $640 million installment in September. Russia needs the money to keep servicing its massive foreign debts. AP-NY-08-20-99 1822EDT Copyright 1999 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without prior written authority of The Associated Press. Announcement: America Online has added Reuters newswires to News Profiles. To add Reuters articles to your daily news delivery, go to KW: <A HREF="aol://5862:146">News Profiles</A> and click on "Modify Your News Profiles." Then click "Edit" and add Reuters from the list on the left. To edit your profile, go to keyword <A HREF="aol://1722:NewsProfiles">NewsProfiles</A>. For all of today's news, go to keyword <A HREF="aol://1722:News">News</A>.
