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Russia may borrow several billions of dollars

06 May 2009 17:20 (UTC +04:00)

Bakuâ€“ APA-Economics. The World Bank may lend â€œseveral billions of dollarsâ€ to Russia in the next two years to bolster social programs as the international body forecasts a sharper economic contraction in the country this year, Bloomberg reported.

â€œWe can easily project several billions of dollars in terms of the headroom we have for Russia, in terms of our own financial reserve policies,â€ Klaus Rohland, the World Bankâ€™s chief representative in Russia, said in an interview in Brussels today.

Russian officials told the World Bank during meetings in Washington last month that â€œthey want to borrow again,â€ Rohland said. The country may seek loans from the lender to cover the expected budget shortfall of at least 3 percent in the next three years, Finance Minister Alexei Kudrin said.

The worldâ€™s biggest energy exporter is sliding into a recession as slumping prices for its oil and gas lead to its first deficit in a decade. The budget gap may be wider than the official estimate of 7.4 percent of gross domestic product, Kudrin said on April 24.

The Washington-based lender would now â€œagreeâ€ with the International Monetary Fundâ€™s forecast for a 6 percent contraction in Russia this year, Rohland said. The World Bank predicted in March that Russiaâ€™s economy will shrink 4.5 percent, which was based on macroeconomic indicators at the end of the first two months of the year.
â€œIf we had done this today we would agree with the 6 percent that the IMF has projected, and the Russian government also agrees with this,â€ Rohland said today.

Last month, Deputy Economy Minister Andrei Klepach described the IMFâ€™s estimate as â€œrealisticâ€ and said the economy probably contracted 9.5 percent in the first quarter, more than the 7 percent previously expected.

The World Bank, whose last major loan to Russia was for $1.5 billion on Aug. 6, 1998, wants to see the money used for social needs, including pension reform, the health-care system and improving housing and community services, Rohland said.

The lender will â€œmove fastâ€ in its talks with Russia and expects to begin disbursing money before the end of this year, he said.