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Russia Faces Foreign Debt Payments

August 25, 2002

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MOSCOW (AP) _ The Russian government faces a major financial test next year with a peak in foreign debt interest payments, but the finance minister predicted Sunday that this challenge could be a turning point for the country.

``Russia can compare next year with the crossing of the Alps by Suvorov’s army,″ Finance Minister Alexei Kudrin said, referring to Alexander Surovov’s legendary 1799 march through the Swiss Alps, an arduous and desperate crossing that saved his troops from encirclement by French forces and earned him a place in military history.

``If Russia manages to pass the peak, confidence in our country will grow a lot,″ Kudrin said, according to ITAR-Tass news agency.

Kudrin, who is also deputy prime minister, said that foreign debt payments will reach $17.3 billion next year. In 2001, Russia attempted to reschedule billions of dollars of foreign debt, but the negotiations failed and Russia pushed ahead with the payments.

Russian officials have expressed confidence that the country’s finances can absorb the payments, even amid concerns about the stability of the price of oil, which the Russian budget heavily depends on.

While reviewing the draft 2003 budget, Kudrin pledged Sunday that workers on the state payroll will receive their salaries on time next year, ITAR-Tass reported. He also lauded plans to raise expenditures for the armed forces.

``We must provide for the worthy living of servicemen and their families and the equipment of the armed forces to prevent tragedies, which we have been witnessing recently,″ said Kudrin, who announced some minor changes to the draft budget approved by the Russian Cabinet last week.

The budget anticipates revenues to top about 2.4 trillion rubles ($77.4 billion) and expenditures of approximately 2.3 trillion rubles ($77.2 billion). It is slated to be Russia’s third surplus budget.

The budget is now expected to be distributed to the lower house of parliament, the State Duma, for consideration.

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