Old Saint Basil's Cathedral in MoscowJohnson's Russia List title and scenes of Saint Petersburg
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#1 - JRL 8446 - JRL Home

MOSCOW, November 10 (RIA Novosti) - Presidential advisor Andrei Illarionov said he did not think the sale of Yuganskneftegaz was necessary for the Russian economy.

"I am not sure that the sale of Yuganskneftegaz is what the Russian economy needs most of all," Mr. Illarionov told reporters on Wednesday.

Mr. Illarionov said that before the end of the year about $15 billion would be accumulated in the Stabilization Fund.

He said he was against the Finance Ministry's proposal to raise the cutoff price for a barrel of oil for paying into the fund. In his opinion, the increase is unacceptable. He said that the best cutoff price was $10 a barrel.

Andrei Illarionov said the $20 a barrel cutoff price only allowed a small part of the revenues from the favorable foreign economic situation to be paid into the fund.

He said the most effective way of spending the Stabilization Fund was to pay off the country's foreign debt and added that given the function of the fund, money from it could be spent outside Russia. Mr. Illarionov mentioned three ways of spending money outside Russia: conducting foreign policy, including the construction of diplomatic missions and consulates, improving Russia's image and maintaining military bases. He said that the money could also be used to accumulate reserves and pay off foreign debt.

"None of the other ways are as efficient as paying off foreign debt," Mr. Illarionov said and added that if the policy of paying off foreign debt was a priority since 2000, "the foreign debt would be fully paid off by 2010."

In his opinion, it is necessary to pay off foreign debt from the Stabilization Fund until the debt payments interest rate is higher than the fund's interest rate.

He said he was against using the fund on investment projects, including infrastructure projects. "Honest companies need to build pipelines and airports," he noted. "The private sector can finance any project."