Russia may borrow several billions of dollars

Russia may borrow several billions of dollars
# 06 May 2009 17:20 (UTC +04:00)
Baku– APA-Economics. The World Bank may lend “several billions of dollars” 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.

“We can easily project several billions of dollars in terms of the headroom we have for Russia, in terms of our own financial reserve policies,” Klaus Rohland, the World Bank’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 “they want to borrow again,” 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 world’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 “agree” with the International Monetary Fund’s forecast for a 6 percent contraction in Russia this year, Rohland said. The World Bank predicted in March that Russia’s economy will shrink 4.5 percent, which was based on macroeconomic indicators at the end of the first two months of the year.
“If 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,” Rohland said today.

Last month, Deputy Economy Minister Andrei Klepach described the IMF’s estimate as “realistic” 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 “move fast” in its talks with Russia and expects to begin disbursing money before the end of this year, he said.