Russia to raise oil export taxes

Aug 27, 1999 02:00 AM

The Russian government will sharply raise export taxes on oil and gasoline in October to boost revenues and guarantee enough gasoline for domestic markets, an official said.
An increase in global oil prices this year has prompted Russian oil companies to funnel production to lucrative foreign markets, instead of domestic markets where prices are lower. The trend led to severe gasoline shortages in some parts of Russia and sharp price increases.
With parliamentary elections due in December, the government wants to avoid public anger over rising gasoline prices and has threatened to restrict oil exports to guarantee enough gasoline for domestic markets. Deputy Prime Minister Viktor Khristenko announced that the government has decided to rise export taxes on crude oil from about $ 5 to $ 10 per metric ton starting Oct. 1, the Interfax news agency reported.

The government will also introduce "prohibitive taxes" on the export of gasoline, and raise fuel oil export taxes from about $ 9 to $ 14 per metric ton, Khristenko said. The measures are likely to reduce exports, leaving more fuel for domestic markets - while ensuring at the same time that the government doesn't lose too much tax revenue.
Moscow's finances remain in a sad shape, despite the recent boost provided by the increase in global oil prices. The Russian economy relies heavily on exports of raw materials, especially oil and gas.
The biggest problem for Moscow is paying off its foreign debt, which will grow to $ 166 bn on January 1, up from $ 156.6 bn a year before, according to the government's estimates cited by the Interfax news agency. The debt will grow to $ 177.6 bn by the start of 2001, according to the government report to parliament.
Russia has missed several foreign debt payments over the past year, while negotiating new loans from the International Monetary Fund and the World Bank - which means that both principal and servicing fees are accumulating.

Source: AP
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