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    IMF: Russian 2006 budget to be balanced if based on oil price of $31 pb

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    MOSCOW, June 3 (RIA Novosti) - The International Monetary Fund (IMF) said Russia's budget for 2006 would be balanced, given it is based on the oil price of $31 per barrel, Paul Thomsen, the IMF senior representative in Moscow, said today.

    Speaking at a press conference, Thomsen said it would be hard to maintain the $31 level, considering social spending and routine expenditures.

    According to him, the 2004 budget balance was based on the oil price of $23 per barrel, and the 2005 budget will be balanced if the oil price is $28 per barrel (not considering budget amendments that can still be adopted at the end of this year).

    The IMF official said Russian should accumulate profits from high oil prices in the Stabilization Fund.

    We think the profits should be put aside to the Stabilization Fund with the same cut-off price, until Russia is ready to pursue reforms, said Thomsen.

    According to him, the protracted reforms prevent additional oil profits from being used for economic modernization.

    We are worried that it may lead to higher current [budget] spending, and Russia will lose its chance of economic growth if oil prices dive, said Thomsen.

    He added that the main threat facing Russian economy was not so much lower oil prices on the world market but the possibility that additional oil profits will be spent not in the best way, i.e. on social payments (wages, pensions and other current expenditures).

    Thomsen also said channeling Stabilization Fund money for early Paris Club payments was a fairly sensible decision, including in economic terms.

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