RUSSIA - Feb. 8 - Moscow Revises Budget To Meet Paris Club Debt.

Finance Minister Alexei Kudrin says the federal budget will be amended extensively to meet debt servicing obligations to the Paris Club and raise social spending. He confirms Moscow's retreat from a confrontation with its sovereign creditors in the Paris Club. (Last month the government sparked alarm by saying it might not service its Paris Club debts in full this year because too little money was provided in the budget. The amendments will have to be approved by the Duma which passed the original budget in October. There are two main holes in the budget that need to be plugged. The government needs to provide about $2.5 bn more for servicing its foreign debt this year. And it needs to find new revenues to substitute for the $1.75 bn it expects from the IMF written into the budget. Kudrin says he would find most of the money from higher-than-expected tax revenues. Oil prices and inflation are both running higher than forecast in the original budget. These windfall tax revenues would come to 107 bn roubles - $3.75 bn). Kudrin says the government would seek to raise 30 bn roubles in new domestic borrowing this year, and at least 15 bn roubles in extra privatisation revenues. It could also draw on 33 bn roubles in Treasury bank accounts. But he warns this might not be enough to keep the budget in balance, and that the government would be looking for a further 24 bn roubles from other sources in the course of the year. (Kudrin's remarks imply a sharp increase in federal spending this year, more than the $40 bn first budgeted. But some of this may be a political tactic. The government may be hinting now at generous new social spending to offer a package deal on the budget that will pass easily through the parliament and be cut back later. The government also outlined its plans for privatisation this year. It confirmed its intention to offer a 6% stake in Lukoil. It also plans to offer shareholdings in three coal mining companies, a port and two air transport firms).