Putin: Change Russian Tax Code

Russian President Vladimir Putin on Thursday called for more clarity in Russia's complicated tax code, saying that small businesses must have greater financial freedom to operate.

Russia's tax code is seen as oppressive and archaic, and many businesses use numerous loopholes to avoid paying. In some instances, if a company were to pay all its taxes, it would have to pay out more than 100 percent of its profits.

Speaking at a Cabinet meeting, Putin said changing the tax code was a key part of his agenda, and that small businesses were being pressured too much by current tax laws.

Putin, who won elections in March, hasn't detailed his economic program, but has made general calls for boosting foreign investment and developing business while maintaining some state control over the economy.

Meanwhile Thursday, Russia made a $122 million loan payment to the International Monetary Fund, the Finance Ministry said.

Russia has been making regular payments to the IMF after defaulting on billions of dollars in loans in 1998. Moscow wants to remain in the fund's good graces in hopes of resuming a $4.5 billion loan deal suspended last year.

Putin says Russia will honor its financial commitments and maintain relations with the IMF, but shouldn't be too dependent on loans.

Shortly after the payment was made, Finance Minister Mikhail Kasyanov said Russia would welcome a $1 billion loan in the second half of the year.

According to the news agency Interfax, Kasyanov said Russia would be able to get by without the loan, but that the money would "enable the use of our national resources for the solution of domestic problems."

In another positive sign, Kasyanov said industrial output rose 11.9 percent in the first quarter of 2000, compared with the same period last year, the ITAR-Tass news agency reported.

Also, Central Bank hard-currency reserves, which are a measure of the strength of the ruble, rose $800 million this week to reach a 21-month high of $16.3 billion.

Kasyanov spoke shortly before leaving for the United States, where he will take part in a meeting of finance ministers and central bankers from the G-7 group of leading industrial nations, of which Russia is not a member. At the meeting, Russia will lay out its economic performance from last year, Kasyanov said.