10:26 GMT +323 March 2018
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    MOSCOW, July 15 (RIA Novosti) - After 2008, Russia plans to undertake a notable reduction of its borrowings from international financial organisations, Finance Minister Alexey Kudrin said Thursday at a government session. He, however, admitted that in 2005 borrowings would increase to $952 million to accelerate projects being financed from these credits. The budgetary expenditure on these projects is to be enhanced to accomplish them within two to three years, said Kudrin.

    The total worth of this year's loans from international lending institutions will also go up to $386 million, according to the finance minister. This however does not affect tied credits which are being diminished due to no prospect for opening new projects and unfavourable terms of crediting.

    The state domestic debt has been on the rise to hit 841 billion roubles ($1 equals 29 roubles) next year and to continue to swell until 2008, with the simultaneous hike in servicing expenses.

    Kudrin reported this year's issue of three billion roubles worth of Eurobonds which are expected to stand at 2.5 billion roubles next year.

    As no need of wide-scale borrowings will arise in 2005, the government's goal will be minimizing them on the external market, said Kudrin. He added that the previous years had seen more hefty borrowings but the recent tendency of additional injections into the budget due to high oil prices has improved the situation. "Our debt has been steadily growing until recently, but now the government is having additional gains," he said. The finance ministry's forecast for 2004 is that the favourable balance of external borrowings will make 92 billion roubles despite the previous plans of 108 billion roubles.

    "The favoruable balance of borrowing on the external market will be chiefly spent on the repayment of the foreign debt," said Kudrin.

    According to Kudrin, the favourable balance of internal borrowings is forecast at the level of 89 billion roubles in 2005. The general balance next year will enable a more reserved attitude toward borrowings on the external and domestic markets, said Kudrin.

    The minister assured that in 2005 Russia will begin spending from the stabilisation fund without involving any borrowings.

    "The difference between attracted credits and stabilisation fund is that the latter serves as an instrument of refinancing," explained Kudrin.

    Kudrin also reported that in 2005 Russia would pursue only one new project with international lending institutions, that is the housing and amenities reform project with the World Bank. "This is a way to save budgetary funds," said Kudrin.

    The finance minister pointed to the necessity of renovation in the housing and amenities sphere. "The streamlining of housing and amenities reform mechanisms is required. I cannot specify the sum for the next few years but this is definitely hundreds of billions of US dollars," he said.

    One more project which was initially conceived as a joint effort will be now implemented by Russia alone-it concerns regional financing, noted Kudrin. "This project was once carried out with assistance from international organisations. But we have already gained certain experience and can rely on ourselves," said Kudrin adding that 600 million roubles have been earmarked for the project.

    The minister noted that the general number and level of Russia's borrowings from international organisations would be specified.

    "Our projects are to be launched next year which is not a time for major borrowings: we'll have to be engaged in extensive preparations," said Kudrin.

    He also reported that of this year's $4,108 million borrowings, $1,218 million will be used this year.

    Russia is to expand its programme of crediting foreign states by $113 million, that is from $639 million to $752 million, said the finance minister at the government session.

    "In 2003, we lent foreign states loans (those were tied credits)to the sum of $135 million, spent by Russian companies on the export of equipment to the states being supplied with credits," noted the minister.

    "Performance figures in 2004 are expected to be higher than planned and we are going to introduce these changes to the programme this autumn," he said.

    Loans will be chiefly granted to China for the construction of the Tianwan nuclear power plant ($401 million) and to India for the construction of the Kudan-Kulan nuclear power plant ($437 million). There are also plans for extending loans to Bulgaria for the building of the Kozlodui nuclear power plant and to Vietnam for the construction of an electric power station.

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