Document of The World Bank FOR OFFICIAL USE ONLY Report No. P-6919-RU REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED COAL SECTOR ADJUSTMENT LOAN IN AN AMOUNT EQUIVALENT TO US$500 MILLION TO THE RUSSIAN FEDERATION JUNE 5, 1996 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Figures are as of end of period) CURRENCY UNIT = RUBLE (RB) RUBLES PER US$ 1991 169 1992 415 1993 1,247 1994 3,550 1995 4,640 May 1996 5,031 BORROWER'S FISCAL YEAR January I - December 31 WEIGHTS AND MEASURES Metric system is used ACRONYMS, ABBREVIATIONS AND GLOSSARY CBR Central Bank of Russia PHRD Policy and Human Resource Development PIU Project Implementation Unit EA Environmental Assessment PPU Project Preparation Unit EFF Extended Fund Facility TA Technical Assistance GDP gross domestic product GKI State Property Committee GOR Government of Russia USAID United States Agency for International Development Inter- Inter-Agency Commission for Agency Socio-Economic Problems of Commis- Coal-Producing Regions sion IAP Coal Sector Restructuring Implementation Assistance Project IMF International Monetary Fund JGF Japan Grant Facility MOE Ministry of Economy MOF Ministry of Finance FOR OFFICIAL USE ONLY RUSSIAN FEDERATION COAL SECTOR ADJUSTMENT LOAN Loan and Project Summary Borrower: Russian Federation Executing Agencies: Ministries of Economy and Finance of the Russian Federation Amount: US$500 million equivalent Terms: Maturity of seventeen years, including five years of grace at the Bank's standard variable interest rate for currency pool loans. Loan Objectives: The proposed SECAL will help the Government put in place a consistent policy and institutional framework for the continuous and socially sustainable restructuring of the coal sector and provide assistance in implementing the initial steps of the overall restructuring program. The SECAL will support: (a) a program for the progressive reduction and eventual elimination of subsidies through (i) the elimination of subsidies for operating losses and investment, (ii) the redirection of remaining subsidies towards restructuring and related social programs, and (iii) the establishment of a transparent mechanism for the allocation and effective monitoring of subsidies; (b) special Community Support and Employment Programs in areas where coal-related unemployment is expected to be high; and (c) the development and initial implementation of measures intended to commercialize and de-monopolize the coal sector. Loan Description: The proposed SECAL will be quick-disbursing and will provide budget and balance of payments support, linked to the conditionality specified for tranche release. Disbursements of the Loan will not be linked to any specific purchases, but will be subject to a standard negative list of ineligible goods and countries of origin. Benefits: The proposed Coal SECAL would support the effective implementation of a far-reaching restructuring program in one of the most critical sectors of the Russian economy. The program will promote an increasingly profitable and competitive coal sector through judicious closure of unprofitable mines, demonopolization and commercialization of regional coal companies, and further improvements in operational efficiency over time. This would, in turn, decrease and eventually eliminate subsidies and the related impact of the coal sector on the federal budget. In addition to economic benefits, the restructuring program would promote sustainability of the coal industry through a participatory approach by key stakeholders and capacity building in key areas, including improved measures to mitigate social and environmental impacts in the affected areas. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Risks: This is a highly risky operation. The major risks involve the ability of the Government to deliver on policy reforms stemming in part from political uncertainties and difficulties in maintaining a sustainable program of stabilization and structural reform. Even without the political uncertainties, reaching a consensus on the needed reforms and implementing them will be difficult since the reduction and redirection of subsidies, the closing of mines and the de-monopolization of the sector threaten major vested interests and face strong resistance. Moreover, the Government's institutional capacity to implement the complex social and structural reforms proposed is undemonstrated. As a two-tranche, quick-disbursing operation, the proposed Coal SECAL by itself cannot provide sustained Bank support for the Government's coal restructuring initiatives over the medium term. The risk that the restructuring momentum will not be sustained is addressed through assistance provided under the proposed Coal Sector Restructuring Implementation Assistance Project, which is longer in duration and will serve as a vehicle: (i) to assure Government that the Bank intends to remain engaged in the sector beyond the life of the proposed SECAL; and (ii) to help strengthen the institutional capacity of the Government to implement the reforms. Progress on coal sector restructuring over the last 2-3 years, together with the commitments in the Government's Policy Letter, provide a reasonable assurance that the reforms will continue if implementation problems can be addressed. Disbursement: The SECAL will be released in two tranches of equal size: the first on effectiveness (expected in July 1996) and the second on fulfillment of specific tranche release conditions (expected in the fourth quarter of 1996). Commitment Fee: 0.75% on undisbursed credit balances, beginning 60 days after signing, less any waiver. Poverty Category: Poverty-focused, limited to Social Safety Net for redundant coal industry workers, their families and affected communities. Rate of Return: Not applicable Project ID Number: RU-PA-38550 REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED COAL SECTOR ADJUSTMENT LOAN TO THE RUSSIAN FEDERATION TABLE OF CONTENTS Page No. PART I. INTRODUCTION 1 PART II. THE MACROECONOMIC CONTEXT 2 A. Relations to the Country Assistance Strategy and the Macroeconomic Situation 2 B. Need for Structural Change 2 C. Macroeconomic Prospects 2 PART III. THE COAL SECTOR 3 A. Coal Sector Profile 3 B. Distortionary Effects of Subsidies on Coal Industry Performance 4 C. Adapting to Changing Economic Circumstances 5 PART IV. THE GOVERNMENT'S COAL INDUSTRY RESTRUCTURING PROGRAM 6 A. Government's Strategy 6 B. Subsidy Phase-Out and Targeting 8 C. Employment Policies 10 D. Mine Closures II E. Social Safety Net 12 F. Public Participation and Social Impact Monitoring 13 G. Commercialization and Demonopolization 13 PART V. THE PROPOSED BANK LOAN 14 A. Bank Involvement to Date 14 B. Rationale for Further Bank Involvement 15 C. World Bank Group and IMF Support 15 D. Loan Features 15 E. Monitoring Arrangements 19 F. Poverty Category 20 G. Environment 20 H. Proposed Coal Sector Restructuring Implementation Assistance Project 20 PART VI. BENEFITS AND RISKS 22 PART VII. RECOMMENDATION 23 Annexes, Schedules and Map: Annex 1. Letter of Sector Development Policy 25 Annex 2. Policy Matrix 59 Annex 3. Status of IMF Operations in Russia 64 Annex 4. Key Economic Indicators 65 Annex 5. Key Exposure Indicators 69 Annex 6. Poverty and Social Development Indicators 70 Annex 7. Balance of Payments 72 Annex 8. Public Finance 74 Schedule B. Russian Federation at a Glance 76 Schedule C. Timetable of Key Processing Events 79 Schedule D. Status of Bank Group Operations in Russia 80 Map IBRD 28004 Documents in Project File 1. Russian Federation - Restructuring the Coal Industry: Putting People First (Bank Report 13187-RU, December 1994) 2. Basic Trends for Coal Industry Restructuring (Inter-Agency Commission for Socio-Economic Problems of Coal-Producing Regions, July 1995) 3. Decree of the President of the Russian Federation of February 9, 1996 No. 168, On Measures Regarding the Further Improvement of the Structure of the Coal Industry of the Russian Federation 4. Government of the Russian Federation Resolution No. 598 of May 17, 1996, On Confirmation of the Regulation on State Financing of Measures Regarding Coal Industry Restructuring This report is based on missions which visited Russia in August and October 1995 and February, March-April, and May 1996, comprising at various times Messrs./Mmes. David Craig (Senior Energy Economist, Task Manager and Mission Leader), Costas Michalopoulos, Jonathan Brown, Friedrich Peloschek, Vadim Voronin, Selina Shum, Gordon Hughes, Qimiao Fan, Lev Freinkman, Mary Canning, Jeff Procak, Mary Louise Vitelli, Aleksey Proskuryakov, and Ayse Kudat. The UK KnowHow Fund (David Merrick, Peter Scott, Tom Pedrick, Bruce Weston, and Ian Day) and USAID (Robert Hall, Patrick Bodnar, and Catherine Cosman) provided consulting services to the Russian Government in support of SECAL preparation. Peer reviewers were Peter Van der Veen, Laszlo Lovei, and Louise Fox. Yukon Huang and Jonathan Brown are, respectively, the Director of the Country Department and Division Chief of the Infrastructure, Energy and Environment Division, responsible for Russia in the Europe and Central Asia region. REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED COAL SECTOR ADJUSTMENT LOAN TO THE RUSSIAN FEDERATION I. INTRODUCTION 1. I submit for your approval the following report and recommendation on a proposed Coal Sector Adjustment Loan (Coal SECAL) to the Russian Federation for the equivalent of US$500 million to provide financial support for the Government's Coal Sector Restructuring Program. The Loan would be at the Bank's standard variable interest rate, with a maturity of seventeen years, including five years of grace. 2. Background. Restructuring the coal sector is a crucial part of the Government's program for sustaining stabilization of the Russian economy. The coal sector remains one of the largest recipients of budget subsidies in the country, second only to the agro-industrial complex. Further, a large part of the subsidies have been used to cover operational losses of regional coal companies and mine investments, thus hindering competition and financial discipline in the coal sector. The problems inherent in this subsidy system have been exacerbated by lack of transparency and financial accountability in the subsidy management system and by the practices of RosUgol, a state-owned enterprise which has exercised a virtual monopoly over the coal industry, including: (i) until recently, allocation of budget subsidies; (ii) management of state shares in regional coal companies; (iii) ownership in a broad spectrum of service industries in the coal sector; and (iv) enforcement of state directives pertaining to mine health and safety standards. 3. The Government has placed high priority on restructuring the coal sector. In mid-1993, the Government created an Inter-Agency Commission for Socio-Economic Problems of Coal-Producing Regions (the Inter-Agency Commission) for the purpose of advising the Government on coal industry restructuring.' Since then, under the direction of the First Deputy Prime Minister, the Government has prepared a large scale restructuring program aimed at transforming the coal industry into a sustainable and competitive sector of the economy. The principal objectives of the Program are to: (i) reduce the impact of the coal sector on the federal budget by supporting the decrease, and eventual elimination, of subsidies; (ii) promote the long term sustainability of the coal sector through establishment of a competitive, commercial industry; (iii) support a restructuring program to reduce the size of the industry to increase efficiency; and (iv) cushion the impact of the restructuring on coal miners, their families and affected communities. The Inter-Agency Commission includes representatives of: key federal agencies, including the Ministries of Finance, Economy, Fuels & Power, Labor, and Social Protection, the Federal Employment Service and the State Property Committee; regional governments in the coal producing areas; the management of the national coal company, RosUgol; and the two main coal labor unions. The Coal Department of the Ministry of Economy acts as the secretariat for the Inter-Agency Commission. II. THE MACROECONOMIC CONTEXT A. RELATIONS TO THE COUNTRY ASSISTANCE STRATEGY AND THE MACROECONOMIC SITUATION 4. The most recent Country Assistance Strategy (CAS) for the Russian Federation was discussed by the Board on June 6, 1995; a CAS Progress Report was discussed with the Board on March 28, 1996. The 1995 CAS recommended a flexible response strategy closely linked to the Government's progress on macroeconomic stabilization and structural reform. The CAS indicated that, under an Intermediate Case scenario, the Bank would be prepared to provide assistance to support restructuring of the coal industry, provided that the Government takes the lead in developing an appropriate program. 5. Since the last CAS, the Bank has continued to operate under an Intermediate Case scenario, which remains broadly appropriate in the current environment. This scenario assumes that there will be continued progress in macroeconomic stabilization, as evidenced by the recent agreement with the IMF on an Extended Fund Facility (EFF) program. In this situation, the Bank would aim to provide around US$1.2-1.5 billion annually in investment lending, including a "core" program of relatively straightforward projects in infrastructure and the social sectors. In addition, the Bank would be willing to provide up to US$1.5 billion annually in relatively fast-disbursing assistance if substantial progress was achieved on key structural reforms in specific areas of the economy, such as coal, the social sectors and agriculture, that are critical to the long-term sustainability of the stabilization process. Over the past year, the Bank has been working with the Government, both within the framework of the EFF negotiations and in separate discussions, to develop a consensus on specific programs of structural reforms that would allow these latter operations to move forward. In the meantime, the Government, with Bank assistance, has continued to prepare 6-7 priority investment projects as the basis for a sustained program of Bank support for the Russian economy over the medium term. B. NEED FOR STRUCTURAL CHANGE 6. While the Government has made important progress in reducing the overall budget subsidies for coal (from 1.04% of GDP in 1993 to 0.45% of GDP in 1995), the current level is still high and represents a significant burden on the budget and the economy as a whole. Budget subsidies for 1996 are planned at Rbl0.4 trillion (or equivalent to US$2.2 billion at the current exchange rate) or about 0.36% of projected GDP. More seriously, a large part of the current subsidies are used to maintain inefficient, loss-making mines, hindering the downsizing of the sector and the emergence of an efficient core. For stabilization to be sustainable, the current level of subsidies to the coal sector has to be reduced further. Also, the remaining subsidies need to be redirected towards restructuring including mine closures, severance payments and related social programs. The proposed Coal Sector Adjustment Loan is designed to support the Government's efforts in these reforms and is consistent with the conclusions reached in the Bank's sector report, Russian Federation - Restructuring the Coal Industry: Putting People First (Bank Report 13187-RU, December 1994). C. MACROECONOMIC PROSPECTS 7. Significant progress has been made by the Russian Government in macroeconomic stabilization during 1995 and early 1996. The decline in the economy appears to have bottomed out, with GDP contracting by 4 percent in 1995 on a year-to-year basis as compared to a decline of nearly 13 percent in 1994. Real income and consumption fell somewhat in 1995, while the decline in investment appears to have slowed down. The fiscal deficit fell from 10 percent of GDP to 6.8 percent in 1995 and monthly inflation decelerated from nearly 18 percent in January 1995 to about 4 percent in January 1996. As a result, Russia met all program targets for its Standby Arrangement with the IMF during 1995. The -3- Government reached agreement on a three-year, $10 billion EFF arrangement in February 1996. Recognizing that the stabilization effort cannot be sustained without appropriate structural policies, e.g., on trade and fundamental reforms in many sectors, including coal, the Government with the assistance of the Bank developed a comprehensive structural reform agenda to accelerate economic transformation which is reflected in the EFF. Russia has met the performance criteria under the EFF during the first and second monthly reviews, the latter just finished on June 5, 1996. However, in light of the weak revenue performance during the pre-electoral period, the Government has resorted to a dramatic compression of expenditures, particularly social expenditures, investment, and rehabilitation. There is an urgent need to enhance revenue performance, particularly through improvements in the compliance of tax payments and arrears. The proposed Coal SECAL will provided an important amount of budgetary support, helping provide a breathing space for the Government until these additional revenue collection efforts start yielding the desired results. Provided the various macroeconomic targets and structural benchmarks developed in coordination with the IMF and the Bank are achieved, a further reduction in inflation and a resumption of growth in real GDP by 2 percent or more are envisaged during 1996. III. THE COAL SECTOR A. COAL SECTOR PROFILE 8. Production Volumes. Russia is the world's third-largest producer and consumer of coal, behind China and the United States, and accounted for 6% of world coal production in 1994. As of 1 January 1995, the Russian coal industry was comprised mainly of 199 active underground mines and 65 active surface mines affiliated with the state-owned coal monopoly RosUgol. These RosUgol affiliates accounted for 261.6 million tons out of a total of 271.3 million tons of coal produced in Russia in 1994. By comparison, the Ukrainian coal industry consists of 244 mines which produced 76 million tons in 1994; the United States coal industry consists of 2,354 mines which produced 937.4 million tons in 1994. 1995 RosUgol coal production amounted to 250.2 million tons. Coal's contribution to total primary energy supply in Russia has been falling steadily since the 1960s. However, while coal now accounts for only about 18% of total energy supply at a national level, it is very important in certain regions. In the Far East, for example, coal supplies more than half of all primary energy requirements. 9. Geographic Scope of Production. Significant volumes (in excess of 15 million tons annually) are produced in seven coal basins covering virtually every region of the country: from the Pechora Basin in the Komi Republic to the Donetsk Basin (Donbass) in Rostov Oblast; from the Ural coal fields to the Kuznetsk Basin (Kuzbass) in Kemerovo Oblast (the heart of Russia's coal industry, which produced 93.5 million tons of coal in 1995, or nearly 40% of Russia's coal production for the year); from Eastern Siberia and Kansk-Achinsk to Yakutia and Primorskiy Krai in the Far East. RosUgol is also involved in shale production; four shale mines in Leningrad Oblast are affiliates of RosUgol. Coal production activities in Russia are also carried out by RosTopProm (which owns 17 mines producing approximately 2 million tons annually for local consumption in the Rostov and Kemerovo oblasts), other ministries, and by oblast-owned, operated, and subsidized companies (OblKemerovoUgol, for example, is expected to produce 5.5 million tons in 1996). 10. Workforce. RosUgol's coal industry workforce, which accounts for 1.1 % of the total labor force, amounted to 819,078 in 1994, compared with 914,331 in 1992. The Ukrainian coal industry employed 925,000 people in 1994, while the United States coal industry reported an average daily workforce of 97,500 employees. The top four employers in 1994 were RostovUgol (84,119), KuznetskUgol (59,422), ProkopyevskUgol (43,733), and VorkutaUgol (42,588) coal companies. -4- 11. Scope of Activites. Data on employment reflect a variety of occupations within the coal industry. In addition to coal mining, mine building, and coal preparation, the industry owns and operates machine- building plants, collective farms, construction companies, research and design institutes, power generation facilities, investment companies, restaurants and cafeterias, and other similar commercial activities. RosUgol itself manages an equipment leasing operation which is funded by the state. There are also a number of social services owned and operated by coal companies, most of which have now been transferred to municipal administrations. These include housing stock, kindergartens, and a number of sanatoria and vacation resorts which cater to the industry workforce. 12. Coal Demand and its Repercussions. World coal consumption has been declining consistently since 1989. In Russia, this decline has been underway since 1987. During the 1980s the coal industry in Russia failed to adapt to increasing competition from low-cost, environmentally friendly natural gas and the consequent decrease in demand for coal. Its problems were then compounded during the reforms of the early 1990s, both by falling demand for all forms of energy and by the removal of very large implicit subsidies on rail freight. It has been estimated that, if the coal industry takes timely measures to adapt to changing economic circumstances, nearly two-thirds of existing coal capacity will remain viable and that as much as one half of the labor force will eventually have to find new jobs. This is, however, a much smaller contraction than that faced by European coal producing countries during the 1970s and 1980s. B. DISTORTIONARY EFFECTS OF SUBSIDIES ON COAL INDUSTRY PERFORMANCE 13. Subsidies. After the price liberalization of the early 1990s, the coal industry became dependent on explicit subsidies from the federal budget (para. 6). These coal subsidies have allowed the coal industry's main customers - power stations and the steel industry - not to pay their coal bills, in the knowledge that the coal industry will extract the shortfall from the federal budget. Perhaps more importantly, coal subsidies have included an explicit subsidy for a portion of the coal industry wagebill, as mandated in a labor accord known as the Tariff Agreement. This has established an implicit belief that the Government is responsible for paying miners' wages, regardless of economic conditions in the coal industry and regardless of whether or not the Government has fulfilled its obligations under the Tariff Agreement. The problems inherent in this subsidy system have been exacerbated by the Government's entrusting to a national coal monopoly (RosUgol, the former Ministry of the Coal Industry) the responsibilities of (i) determining how federal subsidies are to be used and (ii) designating which companies are to be recipients of state support - see below. 14. Structure of the Coal Industry. Until recently, the coal industry has consisted of state-owned coal enterprises (individual mines, service companies, etc.), coal associations (i.e., multi-mine groups of enterprises), and a national coal company (RosUgol). The coal associations and most of the enterprises have now been converted to joint stock companies. RosUgol remains 100% owned by the state and will continue to be 100% state-owned for a period of at least three years although it is shortly to be transformed into a joint stock company to conform with the corporate entity clauses of the Civil Code which came into force on March 1, 1996. However, the coal associations and enterprises have taken a first step towards privatization by giving small, non-controlling packages of shares to the labor collective (management and employees) and to local governments. The state's shares in the coal associations and the coal enterprises are vested in the State Property Committee (GKI). However, GKI delegates commercial management of the state's shareholding in the coal associations and enterprises to RosUgol "in trust". RosUgol therefore appoints the directors of associations and enterprises. The patterns of ownership and control are varied and complex. In general, production units are more tightly controlled by RosUgol than by the coal association to which they belong. Subsidies are calculated and allocated by RosUgol on the basis of individual production units rather than on the basis of coal associations. For this reason, the coal associations have neither the incentive nor the power to close individual unprofitable mines within their portfolio. C. ADAPTING TO CHANGING ECONOMIC CIRCUMSTANCES 15. Restructuring Strategy. While there are many aspects of the problem that are specific to Russia and other transition economies - particularly concerning the social safety net -, the basic remedy has been the same as in all countries that have faced restructuring of their state-owned coal industries. Uneconomic mines have to be closed. Workers have to be transferred to other mines or offered some support while they search for new jobs. Mines that stay in business also need to reduce the size of their workforce. Mine closures and redundancies need to be managed in a socially responsible manner, so that the downsizing process remains politically sustainable. Federal subsidies for operations and investment need to be phased out and remaining subsidies need to be redirected to mine closures and employment/social programs. And, in parallel, the national monopoly company needs to be restructured into a series of independent, multi-mine coal companies - probably regionally based - all competing with each other and with other fuel suppliers. 16. Initial Response. There has been progress on coal restructuring in three areas. First, the Government, within the framework of its coal industry restructuring program, began to close non-viable and unprofitable mines in 1994. In 1994-1995, coal production ceased at 37 mines. A schedule for the preparation of mine closure proposals and other necessary documents to close 95 loss-making non-viable mines has been approved. Forty mines have their closure proposals prepared and approved. Closure proposals for the remaining 55 mines are at various stages of preparation, i.e., being coordinated with local authorities, labor unions, and state expertise. In 1996, the closure of Halmer-Yu mine in the Pechora coal basin was completed. Closure activities are now under way at 64 mines and include the cessation of production, the dismantling of equipment, and the demolition of surface structures. At 34 out of the above-mentioned mines, closure will be completed in 1996-1997, with 22-24,000 employees being laid off in 1996. 17. Second, in 1994 and again in 1995, net attrition (departures minus recruitment) in the coal industry was in the order of at least 10% per annum, in the absence of a major restructuring program. During the early closure activities, many of the laid off workers have been re-employed in nearby mines. As the mine closure program expands, the scope for such transfers will diminish. So far, redundancies from mine closures have been very low compared with the number of voluntary departures from the coal industry as a whole. Miners are leaving not because of mine closures or severance offers, but because they are often receiving their wages 3-6 months in arrears. 18. Third, in the last months of 1995, a substantial portion of the coal industry-owned housing stock was transferred to municipal governments. Most housing, attached utility networks, and social assets in the mining settlements historically were administratively attached to the coal mines and financed through corresponding coal enterprises. More than 2.5 million people, mainly miners and members of the families, lived in such housing in 1993. It is estimated that by January 1, 1996, the initial stock of the social assets remaining attached to RosUgol enterprises declined by more than 70%. As regards other social assets previously operated by the coal companies, anywhere from 9% (sanatoria) to 66% (kindergartens) of this inventory has been transferred to regional or local governments.2 In both cases, however, evidence suggests that the maintenance, repair, and operation of divested social assets are 2 19.3% of coal industry dornitories and 21 % of coal industry recreation and sport facilities have been divested. About 60% of total social costs incurred by coal companies were associated with the housing stock; kindergartens accounted for a further 25% of social costs. -6- underfunded. Sustainable financing for social assets in the coal regions, including those in housing, health, education, childcare being divested from mines, is an important component of the overall social protection system for miners and members of their families. Housing and childcare facilities deserve special attention as they are components of basic social support. 19. Social Impacts. In the second half of 1995, the Bank undertook a Social Assessment in two coal basins (Vorkuta and the Kuzbass) likely to be most affected by the mine closures proposed by RosUgol. The people to be affected by these mine closures feel that: (i) several mine shutdowns reportedly have been inconsistent with existing laws and regulations in the sense that the workers have not received the advance notice required by Russian labor legislation; (ii) coal subsidies could have been used to provide better social protection for those who have lost their jobs; (iii) the coal labor unions have failed to defend the interests of the workers affected by mine closures; (iv) social services transferred from coal companies to municipalities have been allowed to deteriorate; (v) non-miners are inadequately protected from the impact of mine closures by the existing social safety net; (vi) the present institutional arrangements do not ensure an equitable allocation or reliable distribution of subsidies; (vii) coal company management is diverting coal subsidies from wages and other social obligations to operating losses and investment; and (viii) miners are ill-informed about their rights and about the restructuring program and have little trust in the present system, particularly for allocating and distributing subsidies3. IV. THE GOVERNMENT'S COAL INDUSTRY RESTRUCTURING PROGRAM A. GOVERNMENT'S STRATEGY 20. The Government of the Russian Federation has prepared a large scale restructuring program aimed at transforming the coal industry into a sustainable and competitive sector of the economy. The program is designed to improve coal industry efficiency by creating a non-monopolized organizational structure which would include strong regional coal companies. In addition to this, the program stipulates a shift in the focus of coal subsidies from financing wages and uneconomic mines to restructuring of coal companies in a manner that is clear, transparent and monitorable. Unlike coal industry restructuring programs in other countries where coal production capacities were reduced by up to 80-90%, the coal industry in Russia after restructuring is expected to remain one of the largest in the world. 21. The Government has demonstrated its commitment to coal sector reform over the past few years through: (a) liberalization of coal prices;4 (b) a significant reduction in the levels of subsidies in real terms; (c) reduction of RosUgol's role in the allocation and distribution of subsidies; (d) the issuance of a Presidential Decree which allows organizations other than Rosugol to act as trust managers for the state shares in regional coal companies; and (e) commencement of downsizing and other measures to increase efficiency, including cessation of coal production at 37 loss-making mines which have no prospects for economic viability (see para. 16). In sum, the initial restructuring efforts have begun to pay off; labor productivity increased by 11 percent in 1995; and following sharp increases in domestic coal prices toward the end of 1995, the industry as a whole reduced its operating losses significantly in 1995. 3 See "Russia Coal Sector Restructuring Social Assessment", distributed separately to the Board of Directors. 4 In July 1993, the Government took the first major step towards restructuring the coal industry, viz., all federal administrative controls on coal prices were removed. This first step was not fully effective, since RosUgol retained the power to influence individual coal prices by directing smaller or larger subsidy flows to individual coal companies. 22. Long Term Strategy, 1996-2000. In July 1995, the Inter-Agency Commission (para. 3) issued a consensus document on Basic Trends for Coal Restructuring (Basic Trends).5 The main elements of the Government's long term strategy, which are reflected in this document, are: (i) Subsidies. Subsidies to loss-making mines will be gradually withdrawn. Alternative sources of funding will be used to finance maintenance of social assets and to increase expenditure on social programs that support coal restructuring. (ii) Investment. Modernization, rehabilitation and expansion will have to rely more on internal financing by coal companies, loans, direct private domestic and foreign investment and extra- budgetary sources, in addition to state support. (iii) Mine Closures. At least 90 loss-making mines (overall capacity 60 million tons/year, with total direct workforce of 83,000 people) will be closed. (iv) Workforce Reductions. Closure of loss-making companies and modernization of remaining mines will result in reduction of the workforce by 100,000 people, or 20% against the 1994 level. Further reduction of the workforce by 175,000 people will take place as non-core production activities are divested. (v) Social Protection. The main goal of social protection of redundant miners is to provide transitional assistance in parallel with programs to create new, unsubsidized jobs. (vi) Change Management. The federal and regional authorities, in cooperation with RosUgol, RosTopProm and local coal companies, will restructure the system of state support and management of the coal industry. (vii) Commercialization and Demonopolization. The coal industry will consist of a number of independent, competing coal companies that are self-financed on a long term basis. RosUgol will be transformed into a joint stock company whose goals reflect the goals of coal sector restructuring. 23. Medium Term Goals. In the period since Basic Trends was issued, the Government has prepared a set of intermediate goals for 1996-97. In particular, coal subsidies were reduced in real terms in 1996 and Government announced its intention to reduce them again in 1997 by at least 15% in real terms. Government also announced a target of 30% for the share of coal subsidies to be allocated to downsizing/restructuring in 1996, followed by a substantial increase in this share in 1997. In addition, Government transferred the responsibility for allocating coal subsidies from RosUgol to the Inter-Agency Commission and announced monitoring and auditing systems to ensure that coal subsidies are received and used for their designated purposes. Further, starting in mid-1995, the regions have been submitting draft Regional Coal Restructuring Programs to the Inter-Agency Commission as a basis for future funding of restructuring costs and associated social programs. The Inter-Agency Commission has now approved programs for five of the nine major coal basins. Finally, in February 1996, the President of the Russian Federation issued a decree that empowers the Government to strengthen the regional coal companies and 5 On July 17, 1995, the First Deputy Prime Minister transmitted the program to the Bank with a request for a Bank loan to support the program. -8- to assign trust management of the state's shareholding in these companies to various trust agents.6 The Government intends to use these powers during 1996 and 1997 to appoint a number of new trust agents to manage the restructuring and privatization of selected regional companies. 24. Government's Short Term Action Program, 1996. In February 1996, the Government wrote to the Bank stating their intention to move forward on coal restructuring and outlining specific steps for 1996 and 1997. For the immediate future, the Government has a detailed program of actions for the second half of 1996 and early 1997. This program consists of: (i) targets for reducing coal subsidies and refocusing remaining subsidies on downsizing/restructuring; (ii) changes in employment policies in the coal industry to minimize the need for compulsory redundancies; (iii) an acceleration of mine closure completions - but with increased attention to social safeguards; (iv) a substantial reinforcement of the social safety net in coal regions - in the form of new community employment and labor mobility programs and improved delivery of basic social services; (v) new initiatives to promote public participation in the coal restructuring program and to monitor the social impacts of the program; (vi) a systematic program to strengthen the independence of regional/local coal companies; and (vii) additional support for the Inter-Agency Commission to implement the coal restructuring program. This action program is outlined in more detail below; the concrete measures identified bearing target implementation dates prior to mid-June 1996 constitute the conditions of Board presentation and first tranche release. Subsequent measures with later target implementation dates will be conditions of second tranche release and will also be used as evidence to justify future Bank interventions in the coal sector. The conditions of Board presentation and of second tranche release are summarized in Annex 2, Policy Matrix. B. SUBSIDY PHASE-OUT AND TARGETING 25. Subsidy Levels, 1996-1997. Phasing out coal subsidies is an essential part of the Government's macroeconomic stabilization program and strategy for establishing a profitable, market oriented coal sector. Government has already reduced coal subsidies substantially over the last three years. Government will continue to reduce coal subsidies in 1996 and 1997 and will eliminate them entirely as soon as they are no longer needed to support downsizing of the coal industry. 26. The 1996 budget passed by the Duma provides for support to the coal sector amounting to Rb7.4 trillion. In addition, the Prime Minister has instructed the Government (Protocol No. VCh-P14-lpr of 23 January 1996) to increase the amount of support provided to the sector by Rb3.0 trillion, for a total of RblO.4 trillion. The Government intends to finance this additional amount of expenditures through borrowing from abroad so as not to compromise its stabilization objectives. Even this larger total of Rbl0.4 trillion represents a 9% reduction in real terms compared with 1995. 27. The Government's original target was to reduce total budget support to the coal sector further in 1997, by at least 15% in real terms compared with 1996. On the basis of the Government's current commitments (see below), the real reduction in 1997, compared with the 1996 total of RblO.4 trillion, will be at least 20%. 28. Subsidy Allocation, 1996. In the second half of 1995 a large proportion of the social assets of the coal industry - mainly housing, associated heating systems, kindergartens and health clinics - were nominally transferred from the coal companies to local governments. In principle, the corresponding subsidy flows were then incorporated into the overall system of federal-regional transfers. In practice, 6 Presidential Decree No. 168, February 9, 1996, "On Measures Regarding the Further Inprovement of the Structure of the Coal Industry of the Russian Federation ", empowers the Government to move forward with demonopolization of the coal industry. - 9 - when there are revenue shortfalls, this part of the federal budget is very poorly protected against expenditure cuts. As a result, funding of operating costs of social assets has collapsed in practically all coal communities except those where the assets have not yet been transferred to local governments. With the exception of wages, these social assets are the single most important element of the social safety net in coal communities. Coal restructuring cannot proceed on a sustainable basis unless funding of social assets is restored to a satisfactory minimum level. For this reason, as an exceptional measure, the Government has decided to allocate Rbl.6 trillion of coal industry subsidies in the second half of 1996 to regional governments. This allocation will finance local government expenditures on the operation of social assets divested from the coal industry to local governments and, to a lesser extent, on rehabilitation and replacement of such assets. 29. The second priority for the social safety net in coal communities is the social protection expenditures by coal companies, mainly for pre-redundancy services to workers at mines whose closure has been announced, severance payments to workers who are made redundant, and free coal for former workers and/or their dependents. The Government has allocated a minimum of Rb300 billion for these expenditures in the second half of 1996. 30. As a third priority the Government has decided to create a series of pilot Community Support and Employment Programs, initially in five coal basins and to allocate not less than Rb200 billion in total to these programs in the second half of 1996. Funding for these programs will be transferred directly from coal subsidies to regional and local governments without passing through the coal industry. These programs will be managed by local committees (including representatives of local administrations, employment services, businesses, labor unions and non-government organizations) and will provide funding to local initiatives designed to improve or repair social and environmental infrastructure, create new small business and employment opportunities, offer training or re-training and more generally promote labor mobility for displaced workers (details below). 31. In order to finance the increased support for the social safety net in the second half of 1996 within the total subsidy limit of RblO.4 trillion for 1996 as a whole, the Government will find savings in the subsidy allocations for operating losses and investment. In parallel, the Government has announced new policies for these two categories of subsidies. From July 1, 1996, subsidies for operating losses will be available only to coal companies that have limited their recruitment to comply with the new employment policy (see below). Also, investment projects that were already under construction as of January 1, 1996, will be grandfathered and will continue to receive grant financing. However, from July 1, 1996, all other viable investment projects will be funded by loans at positive real interest rates. In this connection, government direct lending to the coal sector, as well as government guarantees for credits provided to the sector by foreign export credit agencies, need to be contained so that they do not imperil the government's creditworthiness and debt service capacity. 32. In summary, the Government has allocated a total of R2.1 trillion for the social safety net in coal communities in the second half of 1996, consisting of: (i) Rbl.6 trillion to regional/local governments for divested social assets; (ii) Rb300 billion for social protection expenditures by coal companies; and (iii) Rb200 billion to regional/local governments for pilot Community Support and Employment Programs. This total of R2.1 trillion represents 38% of the projected total subsidy payments in the second half of 1996 (approximately Rb5.6 trillion). 33. Subsidy Allocation, 1997. The Government's strategy for 1997 is to provide adequate funding for divested social assets through the overall system of federal-regional transfers and to devote a correspondingly larger proportion of remaining coal subsidies to restructuring and the industry-specific social safety net. The Government has set itself two targets for allocation of coal subsidies in 1997: - 10- (i) Not less than one-third of coal subsidies will be allocated to restructuring (ie, physical costs of mine closures) plus a broadly defined social safety net, consisting of: (a) social protection expenditures by coal companies (for the same purposes as in 1996), (b) expanded Community Support and Employment Programs financed through regional and/or local governments, and (c) disability compensation for disabled workers at closed mines. (ii) Production subsidies (i.e., mainly for operating losses and investment) will decline by at least 40% in real terms in 1997 relative to their projected 1996 level of Rb7.1 trillion. Production subsidies include all subsidies other than for restructuring and the broadly defined social safety net (as described above). For monitoring purposes, production subsidies will not include investment loans to coal companies at positive real interest rates. 34. In the light of these commitments, total subsidies provided by the Government to the coal sector for 1997 are estimated at Rb6.4 trillion in 1996 prices, of which Rb4.3 trillion are for production and Rb2.1 trillion are for restructuring and the associated social safety net. This total does not include government expenditures in support of already divested social assets or support for investment via loans at positive real interest rates. The Government, however, has committed itself to provide an adequate amount of financing for divested social assets in coal communities through federal budget allocations to regional governments for that purpose. If this financing is maintained at the same level in real terms in 1997 as in 1996 (ie, Rb 1.6 trillion), total government subsidies to the coal sector would be approximately Rb8.0 trillion. Within this total, Rb3.7 trillion, or 47%, would be committed to restructuring and the associated social safety net. 35. Subsidy Mechanism. To ensure that coal companies and other beneficiaries use the subsidies for the purposes for which they were intended, the Government has changed the mechanism of allocation and distribution of coal subsidies. As a first step, the Government changed the procedures of channeling subsidies to the local level. Previously, these were largely channeled through RosUgol. As of January 1996, approximately 90% of coal subsidies are channeled from the Ministry of Finance to the local level via the Regional Treasury Departments of the Ministry of Finance. The remaining 10% is accounted for mainly by the Central Reserve Fund, which is used by RosUgol and the Ministry of Fuels & Power for emergencies and other unforeseen expenditures. A very small proportion, about 0.2%, is channeled through RosUgol to locations not served by Regional Treasury Departments. These arrangements now permit Government to identify the causes of delayed delivery of budget funds if and when they arise. As a second step, at its February 1996 meeting, the Inter-Agency Commission approved new subsidy management regulations on the basis of which, starting July 1, 1996, the Inter-Agency Commission will decide on quarterly allocations of coal subsidies between the eleven major categories and between "leading recipients", i.e., either coal companies or regional governments. C. EMPLOYMENT POLICIES 36. In the early 1990s, net attrition from the coal industry workforce was relatively low. However, starting in about 1994, employees have been leaving the coal industry at annual rates of up to 30%. Despite the poor employment prospects in most coal regions, many coal industry employees are finding alternative occupations outside the coal industry that are sufficiently attractive to justify leaving. At the same time, annual recruitment has typically been on the order of 15-20% of the workforce. About 30% of the new recruits are people with no previous employment experience in the coal industry. As a result of natural attrition, the coal industry workforce has been declining at annual rates of around 10-15%. 37. Over the next 12-18 months, the most humane and cost-effective way to reduce the size of the coal industry workforce is to limit recruitment, especially of workers who do not have experience in the - 11 - coal industry. In May 1996, the Inter-Agency Commission approved a new employment policy designed to restrict recruitment in mines that will be closed and use transfers between mines to minimize the need for compulsory redundancies. From July 1, 1996, a coal company will only receive subsidies for operating losses if it limits total recruitment in any quarter to less than 1 % of the total number of its employees. This condition will be embodied in the agreements signed with subsidy recipients. After the limits on recruitment take effect, the net rate of departures from the coal industry will probably be in the range 15-20%, initially with a relatively small proportion of compulsory redundancies. The Government plans to monitor the employment situation in the coal industry closely so that it can adapt its strategy if and when natural attrition rates decline. 38. In support of the objective of establishing a viable, independent, market oriented coal industry, the Government wishes not to be a party to future agreements between coal companies and coal industry employees. In order for the Government to withdraw, the regulatory and legal basis of collective bargaining needs to be changed. By the end of 1996, the Government intends to develop proposals for changes to the collective bargaining process so that future wage agreements are negotiated between employees and employers (the coal companies) on the basis of the financial capacity of the company and of the labor legislation in force at the time. D. MINE CLOSURES 39. A key element in Government's coal restructuring strategy is to close mines that have no prospect of becoming economically viable (para. 15 above). Government's mine closure program started in 1993 and is gathering momentum. However, progress has been slow on completing the closures. Government is now planning to accelerate the permanent closure of mines that have stopped producing coal. 40. The Russian Federation has a legal framework that specifies the steps that a coal company must take before it will be authorized to close a mine. This framework includes the measures required in the areas of employees' rights and entitlements, health and safety and environmental protection. In February, 1996, the Inter-Agency Commission endorsed "The Basic Principles of Closing Non-Viable and Unprofitable Mines" in order to codify these procedures. The Commission now plans to expand and revise these guidelines to ensure that no mine will be closed and no employee made redundant unless there is an adequate social safety net in place and funded. The Government intends to use the proposed Bank-supported Coal Sector Restructuring Implementation Assistance Project to support this work. 41. One of the proposals under consideration is to modify the conditions under which the Inter- Agency Commission will approve requests for state support for a mine closure. In addition to the usual technical and financial proposals, requests for funding would include: (i) evidence that the mine has complied with the new policy on limiting recruitment; (ii) numbers of employees transferring to adjacent mines; (iii) numbers of employees (if any) to receive severance or early retirement packages - and arrangements for pre-redundancy counselling; (iv) funding arrangements to maintain a satisfactory level of social services in affected communities; and (v) satisfactory arrangements for public participation in the mine closure process. 42. Another proposal is to modify the purposes for which the Inter-Agency Commission will allow mine closure subsidies to be used. Under this proposal, state subsidies would be provided for the full cost of the least-cost way of closing the mine (i.e., rapid closure with no recovery of underground equipment or materials) plus the associated social and environmental costs. The Government would not provide subsidies for ongoing coal production at mines once the closure process has started. - 12- E. SOCIAL SAFETY NET 43. The Government's first priority is to ensure that the existing social safety net is fully funded and operational. As noted above, the main elements of the existing social safety net for coal communities would be: (i) timely payment of wages and benefits by coal companies; (ii) adequate funding for maintenance and operating costs of housing, heating systems, kindergartens and health clinics; (iii) free coal to employees, former employees and their dependents for cooking and/or heating; (iv) full advance notice of mine closures (generally six months); (v) limits on recruitment and maximum use of transfers to minimize the need for compulsory redundancies when mines are closed; and (vi) statutory severance payments for workers who are made redundant. 44. Some of the funding for divested social assets in coal communities will be used to finance labor- intensive activities such as housing maintenance and repairs. While these activities will generate some transitional employment opportunities, they are unlikely to be sufficient to absorb rising unemployment in coal communities. In parallel, therefore, the Government plans to expand the social safety net in two areas related to employment. First, in the workplace, the Federal Employment Services will expand their coverage to ensure that pre-redundancy counseling is available to all coal industry employees threatened with redundancy. Second, for everyone in the communities affected by coal restructuring, the Government plans to introduce new transitional employment and longer term job creation programs. 45. The transitional employment and longer term job creation programs will be implemented through an expanded set of Community Support and Employment Programs, initially in five coal basins (Pechora, Moscow, Kuzbass, Eastern Donbass, and Kizel). Funding will be channeled directly from coal subsidies to the regional governments in these coal basins. The Government plans to use the proposed Bank- supported Coal Sector Restructuring Implementation Assistance Project (para.69) to accelerate the design and implementation of these pilot programs. Specifically these programs will develop: (i) Emergency Social Assistance: canteens for the poor and disadvantaged; day care centers; special programs for the unemployed to get credit and training to set up small enterprises; job clubs; counselling for disabled and young people leaving school early. (ii) Transitional Employment Programs: to provide interim employment for workers for whom alternative employment cannot be found and whose unemployment and other benefits have been exhausted, eg, in labor-intensive community projects such as rehabilitating housing, cleaning up the environment, and repairing public facilities. (iii) Local Economic Development Programs: aimed at creating sustainable new jobs through the development of new enterprises and expanding existing ones, eg, via technical assistance to small and medium businesses; setting up business incubators; establishing revolving loan funds and, in certain situations, grant facilities; and restructuring of vocational schools to provide new training opportunities. 46. The Community Support and Development Programs will be designed and managed locally. In cases where employment prospects are poor, for example in Vorkuta, the local authorities may decide to use the funding to promote labor mobility rather than to create uneconomic jobs in the far north. The creation of appropriate agencies and committees at local level will take time. In the meantime, the Federal Employment Services (which has offices and staff in all five targeted coal basins) will participate in the startup of these Community Support and Employment Programs. The pilot program for Economically Devastated Areas, which is being developed under the World Bank Employment Services and Social Protection Project, will provide some guidance for the design of these programs. The administrative - 13 - capacity of local offices of the Federal Employment Services will be strengthened in coal regions. The capacity of local offices of the Ministry of Labor and the Ministry of Social Protection also needs to be strengthened to ensure that they can deliver the benefits and services available through the other components of the legal social safety net. F. PUBLIC PARTICIPATION AND SOCIAL IMPACT MONITORING 47. The Government will take steps to promote local community participation in coal restructuring by: (i) providing miners, their families and communities with adequate and timely information about the content of the coal sector reform program, the reform implementation arrangements, their entitlements during restructuring and the mechanisms for legal recourse; and (ii) strengthening the capacity of local institutions, labor organizations, and non-governmental organizations so that miners, their families and communities can more effectively voice their concerns and promote actions on their behalf. 48. Social partnership mechanisms of various groups of residents in coal regions whose interests are directly affected by restructuring of coal industry will be developed by strengthening regional Inter- Agency Commissions set up in 1994-1995, and by setting up such commissions in coal regions where they have not yet been established.7 On the local level, oversight committees are to be formed with the local heads of administrations of mining communities as the head and consisting of representatives of various affected groups.8 The main objective of the oversight committees will be to determine the strategy for local development, coordination of the development and implementation of local development programs, and the social protection for laid-off workers and residents of mining communities. Oversight committees will determine the guidelines for the disbursement of funds allocated to finance local development programs. 49. The Government will also establish mechanisms at the local level to monitor and assess the impact of restructuring on coal miners, their families and their communities. The main objective of social impact monitoring is to ensure that the benefits for mine workers affected by restructuring and downsizing of the coal industry actually reach them. This means that all benefits that accrue to the coal sector employees under various legal provisions are fully respected; that workers are actually fully informed of their entitlements and are given notice, as per existing laws and regulations; that mechanisms and opportunities for recourse are available; and that the local, regional and federal institutions mandated to assisting the workers and their families and communities actually provide the appropriate services. In cases where the social impact monitoring system determines that intended benefits and services do not reach the miners, the Government will examine the constraints and identify the steps needed for their removal. G. COMMERCIALIZATION AND DEMONOPOLIZATION 50. As noted above (para. 22), Basic Trends outlines Government's vision for a commercial and competitive coal industry, operating within a clear legislative and regulatory framework. As a first step towards implementing that vision, the President of the Russian Federation signed, on February 9, 1996, In May-June 1996 the organization of regional Coal Commissions in the Rostov and Tula regions will be strengthened and improved. Special working groups will be set up under the authority of regional administrations to ensure trouble-free operation in terms of organizational and technical assistance. Regional Coal Commissions will be set up in all coal regions before January 1, 1997. In May-June 1996, local oversight committees will be formed in five pilot mining towns of largest coal- mining regions. Over the longer term, local oversight committees will be established in about 30 mining communities. - 14- Decree No. 168 on Measures Regarding the Further Improvement of the Structure of the Coal Industry of the Russian Federation. This decree: (i) transferred the responsibility for allocating coal subsidies from RosUgol to the Inter-Agency Commission; (ii) instructed the Government to convert RosUgol into a 100% federally-owned joint stock company; and (iii) empowered the State Property Committee (GKI) to delegate commercial management of the state's shareholding in the coal industry "in trust" to a number of trust managers. 51. The Government's approach to demonopolization is the following. First, the power of RosUgol will be substantially reduced as the Inter-Agency Commission takes over the allocation and distribution of subsidies. Second, RosUgol's power as the sole trustee for management of Government's shares in coal companies will be diluted over time as new trustees are appointed. Third, RosUgol's power as the monopoly supplier of technical assistance and marketing services to coal companies will be reduced over time - as has been the case in the petroleum sector - as the coal companies not controlled by RosUgol become free to shop around for these services. Fourth, the Ministry of Fuels & Power will be strengthened to take over RosUgol's de facto role in governmental and regulatory functions, such as health, safety, environment and licensing). Fifth, given this agenda, the Government sees no need to include any restrictions - such as a requirement to divest all commercial subsidiaries by a target date - in RosUgol's charter when it is incorporated as a 100% federally-owned joint stock company. 52. The Government is therefore focusing mainly on improving the transparency and financial accountability of subsidy allocation and utilization and on the selection and appointment of new trust managers. The Government intends to use the proposed Bank-supported Coal Sector Restructuring Implementation Assistance Project to accelerate both these activities. The Government's immediate priority is to strengthen the Inter-Agency Commission to take over the allocation of coal subsidies, starting July 1996. In parallel, by the end of the year, the Government plans to ensure that new trust managers control about 25% of the state's shareholding in the coal industry. This is defined as coal companies that produced in aggregate not less than 65 million tons of coal in 1995. 53. The Government will set up a program to appoint new trust managers via a competitive bidding process open to investment funds, banks and other non-coal institutions. In order to reach the 25 % target for new trust managers by the end of the year, the following steps will be completed over the period June to October, 1996. First, the Government will approve rules governing the trust management of state shares in coal companies, including those covering appointment of new trust managers and their obligations to the federal authorities. Second, the Government will select a number of companies, generally of the "holding" company structure, and transfer to the charter capital of these companies the state shares in subsidiary or related companies. Third, the Government will issue to potential bidders for trust management contracts for the selected companies all of the information required by them for the preparation of their bids. From about October onwards, the Government will start appointing new trust managers. V. THE PROPOSED BANK LOAN A. BANK INVOLVEMENT TO DATE 54. The Bank's involvement in the coal sector began in 1992 with the First Rehabilitation Loan when the Government requested that US$50 million be used to finance critical imports for the coal industry. The Government also asked the Bank to provide advice on coal sector restructuring. The results of this sector work were published in Russian Federation - Restructuring the Coal Industry: Putting People First (Bank Report 13187-RU, December 1994). - 15 - B. RATIONALE FOR FURTHER BANK INVOLVEMENT 55. In response to the Government's request, the Bank has extended its collaborative work through the preparation of a Coal SECAL to support the program. The rationale for the Bank moving forward actively at this time is based on the major up-front actions taken over the past two years and the key policy commitments in the EFF (see paras. 5 and 7) and reaffirmed in the First Deputy Prime Minister 's letter of February 21, 1996. The proposed SECAL will help the Government put in place a consistent policy and institutional framework for the continuous and socially sustainable restructuring of the sector and provide assistance in implementing the initial steps of the overall restructuring program of the coal sector. The SECAL will support: a program for the progressive reduction and eventual elimination of subsidies through (1) the elimination of subsidies for operating losses and investment, (2) the redirection of remaining subsidies towards restructuring and related social programs, and (3) the establishment of a transparent mechanism for the allocation and effective monitoring of subsidies; special Community Support and Employment Programs in areas where coal-related unemployment is expected to be high; the development and initial implementation of measures intended to commercialize and de-monopolize the coal sector. C. WORLD BANK GROUP AND IMF SUPPORT 56. The proposed SECAL is fully consistent with the CAS described above (paras. 4 and 5) and has been developed in close collaboration with the Government. It is buttressed at the macro level by the IMF's EFF agreement noted above (paras. 5 and 7), which includes structural measures on coal reform consistent with the program supported by the proposed SECAL. The principal objectives of the Program to be supported by the proposed SECAL are to: (i) reduce the impact of the coal sector on the federal budget by supporting the decrease, and eventual elimination, of subsidies; (ii) promote the long term sustainability of the coal sector through establishment of a competitive, commercial industry; (iii) support a restructuring program to reduce the size of the industry to increase efficiency; and (iv) cushion the impact of the restructuring on coal miners, their families and affected communities. This program will be supported by a companion Coal Sector Restructuring Implementation Assistance Project (IAP), as described below (paras. 69-72). The Bank is prepared to consider future operations to support coal industry restructuring so as to remain engaged in the implementation of reforms as agreed under the current proposed Coal SECAL. D. LOAN FEATURES 57. The proposed SECAL will be quick-disbursing and will provide balance of payments and budget support, linked to the conditionality specified for tranche release. The proposed SECAL of US$500 million equivalent would be made to the Russian Federation as represented by the Ministry of Finance. Disbursements will be made into a Ministry of Finance Deposit Account in the Central Bank of the Russian Federation (CBR) specially set up for this purpose. The CBR will withdraw the foreign exchange as and when needed to meet market demand from both the public and private sectors and will reimburse the MOF at that time with the equivalent local currency at the market exchange rate. The exchange rate to be applied will be determined by the inter-bank foreign currency auction market. - 16- 58. The SECAL will be released in two tranches of equal size: the first on effectiveness (expected in July 1996) and the second on fulfillment of the specific tranche release conditions outlined below. The second tranche is expected to be released in the fourth quarter of 1996, pending the outcome of a Review of third quarter 1996 performance, scheduled for October 1996. Disbursements of the Loan will not be linked to any specific purchases, but will be subject to a standard negative list of ineligible goods and countries of origin. Government has indicated that the counterpart funds will be used to provide support for the coal sector reform program. Upon notification by the Bank of tranche release for each tranche, proceeds of the loan will be deposited by the Bank into the MOF Deposit Account at the Government's request. If after deposit in this account, the proceeds are used for ineligible purposes (i.e., to finance items imported from non-member countries, or goods or services in the standard negative list), the Bank will require the Government to either (a) return that amount to the account for use for eligible purposes, or (b) refund the amount directly to the Bank, in which case the Bank will cancel an equivalent undisbursed amount of the loan. 59. This tranche structure will provide urgently needed budget support for 1996. Disbursement of the second tranche will depend in part on continued progress towards macro-economic stability. 60. Conditions of Board Presentation. The objectives announced in Basic Trends for Coal Restructuring have now been largely translated into specific targets, mechanisms and dates. A number of key actions have been completed prior to Board presentation. These are: i. a schedule of state support to the coal industry for the second half of 1996 has been approved and made public with details by expenditure category and recipient together with the corresponding implementation schedule for mine closures in the second half of 1996. In the second half of 1996 the Borrower will transfer: a. not less than Rbl.6 trillion to regional governments to finance expenditures on the development, replacement, rehabilitation, maintenance and operation of social assets divested from the coal sector to local governments; b. not less than Rb200 billion in total to Kemerovo Oblast, the Komi Republic, Rostov Oblast, Perm Oblast, and Tula Oblast to finance pilot Community Support and Employment Programs for coal communities within these regions; and c. not less than Rb300 billion to coal companies to finance expenditures on social protection by coal companies for mine workers, former mine workers and their dependents, viz. severance payments, free coal (or cash payments in lieu of free coal), and pre-redundancy services to workers at mines whose closure has been announced. ii. the Inter-Agency Commission has confirmed that, with effect from July 1, 1996, state support funds for investment will be available on a non-repayable basis only for projects where construction began before January 1, 1996. For all other investment projects in the coal industry, state support will be available on a repayable basis only (at positive real interest rates, as specified in the Policy Letter); iii. the Inter-Agency Commission has confirmed that, with effect from July 1, 1996, state support for operating losses will be available only to coal companies that have reduced the number of vacancies so as to limit total recruitment in any quarter to less than I % of the total number of employees; - 17- iv. the Government has instructed the Federal Employment Service to establish, by the end of September 1996, the capability to deliver pre-redundancy services including advance notice and counselling to all workers in the coal industry threatened with redundancy; v. the Inter-Agency Commission has approved and made public a Demonopolization Programn to conclude, by December 31, 1996, the appointment of new Trust Managers. These measures will include the issuance, by October 31, 1996, to potential bidders for trust management contracts all of the information required by them for the preparation of bids. The companies for which new Trust Managers will be appointed by December 31, 1996 will be selected so that their aggregate production of coal in 1995 was not less than 65 million tons, i.e., approximately 25% of the Russian coal industry. vi. the Coal Commission has approved and made public the indicators and arrangements for social impact monitoring, financial monitoring, and auditing of a set of subsidy recipients. a. Social Impact Indicators include: * access to severance compensation specified in the Employment Law availability and accessibility of training, re-training, job placement and job counselling services access to adequate level of social services in the course of sector restructuring access to heating, housing maintenance and utilities access to and availability of information on social safety measures prior to departures from the sector (whether voluntary or not) * provision of pre-redundancy counselling at mines announced for closure, and adequacy of participation / representation in relevant decisions. b. Financial Impact Indicators include agreed data on: * Subsidies * Output and employment Revenues and Expenditures Receivables and Payables, and Capital expenditure. c. Special Purpose Audits will be carried out in accordance with International Auditing Standards and will determine whether or not: financial reports and related supporting schedules prepared by the entities being audited give a true and fair view of the financial situation of resources and expenditures related to state financing; financial information is presented in accordance with established or stated criteria by the Government and by RosUgol; the use of state financing for each subcategory of subsidies has complied with the relevant laws, regulations, policies and contractual agreements; and - 18 - the audited entities' internal control systems used in administering state financing are adequate. 61. Condidons of Second Tranche Release. Disbursement of the second tranche (US$250 million equivalent), anticipated before the end of 1996, would be contingent on a review, satisfactory to the Bank, of: (i) macro-economic performance; (ii) successful implementation of the coal reform program; and (iii) fulfilment of the specific second tranche release conditions listed below: i. During the second half of calendar 1996, the Borrower's actual transfers from the allocation for state support to the coal sector in the Borrower's 1996 budget (a) to regional governments for the development, replacement, rehabilitation, maintenance and operation of social assets divested from the coal sector to local authorities, and (b) to coal companies and local authorities for social protection, including Community Support and Employment Programs, are or were being made in accordance with the schedule, agreed upon by the Borrower and the Bank (see para. 60 (i)). ii. The Borrower has demonstrated to the satisfaction of the Bank that, during the calendar quarter immediately preceding the Second Tranche Release Review, no state support for operating losses was made available to coal mines which have recruited employees in excess of 1 % of their respective total number of employees during such period. iii. State support to the coal industry for 1997 incorporates and is consistent with the parameters agreed upon by the Borrower and the Bank. State support will be assessed on the basis of the most recent approvals available at the time of the Second Tranche Release Review. Depending on whether the particular review takes place in late 1996 or early 1997, the available approvals may include some or all of the following: (a) the Borrower's proposal for state support to the coal industry for 1997; (b) the actual approved budget for 1997; (c) the allocation of State Support to the Coal Industry for 1997 approved by the Inter-Agency Commission; and (d) the actual quarterly transfers during 1997. The Government will present the information on subsidy allocations (in the budget and/or in decisions by the Inter-Agency Commission) in sufficient detail for the Bank to determine whether the Government has met its commitments on coal subsidy allocations for 1997. The parameters agreed by the Borrower and the Bank are as follows: a. the Budget category State Support for the Coal Industry will exclude financing for transferred social assets and such financing will be included in the overall federal budget category for financing of social assets transferred to local authorities throughout Russia; b . not less than one-third of State Support for the Coal Industry will be allocated to: * physical costs of mine closure, * qualifying expenditures on social protection by coal companies, * Community Support and Employment Programs for coal communities financed through regional and/or local authorities, and disability compensation for disabled workers at closed mines; c. State Support for the Coal Industry excluding the items specified in (b.) above and excluding loans to mining companies at positive real interest rates for production development investment will decline by at least 40% in real terms in 1997 relative to 1996; - 19- d. Qualifying items for state support for the physical costs of mine closure will be works required to close mine shafts and workings, to make safe all mine workings, to demolish surface buildings and structures, to mitigate the environmental impact of mine closure, and to rehabilitate the environmental damage caused by past mining activities. e. Qualifying expenditures on social protection by coal companies will be as defined above (para 60.(i.)(c.)). f. Qualifying expenditures on disability compensation for disabled workers at closed mines will be lump sum payments to the workers themselves, to social insurance funds, or to similar agencies either in lieu of or to replace wage income and other regular benefits for workers at closed mines who are partially disabled as a result of accidental injury or occupational disease resulting from employment in the coal industry. iv. The Borrower has initiated the operation of the regional offices of the Federal Employment Services, in all regions where mines are being closed, with adequate capacity to deliver pre-redundancy services free of charge to employees prior to cessation of coal production for all coal industry employees of mines whose closure has been announced. v. The Borrower has established the necessary institutional framework, which includes the participation of the Federal Employment Services, and has initiated the activities of the Community Support and Employment Programs, agreed upon by the Borrower and the Bank, in the Kuzbass, Eastern Donbass, Pechora, Moscow region and Kizel coal basins. vi. The Borrower has taken all actions required to be taken in accordance with the Demonopolization Program, agreed upon by the Borrower and the Bank (see para. 60.(v.)). vii. The Borrower has demonstrated, on the basis of social impact and monitoring reports for the calendar quarter preceding the Second Tranche Release Review, overall compliance with social impact indicators, agreed upon by the Borrower and the Bank (see para. 60.(vi.)(a.)), and has made public such reports. viii. The Borrower has prepared and furnished to the Bank a financial impact monitoring report on the financial performance of the regional coal companies in such scope and detail as agreed by the Borrower and the Bank (see para. 60.(vi.)(b.)). ix. The Borrower has submitted to the Bank audits on five coal companies, which are main (largest) recipients of state support, in such scope and detail as has been agreed upon by the Borrower and the Bank (see para. 60.(vi.)(c.)). E. MONITORING ARRANGEMENTs 62. Social Impact Monitoing. The Bank has been assured by Government that comprehensive efforts are envisioned to monitor the social impact of coal sector restructuring (see paras. 60.(vi.)(a.) and 61 .(vii.)). 63. Financial Monitoning. Difficulties in obtaining prompt and relevant information on the distribution and use of subsidies to the coal industry have been a major barrier to reforming the subsidy system over the past 2-3 years. Government is acutely aware of this problem and through the Inter- Agency Commission has emphasized that, in future, subsidies must be allocated in a manner that -20- addresses issues of transparency and accountability. Rosugol has undertaken to provide all relevant information (para. 60.(i.)) to the Inter-Agency Commission and the Bank. 64. Special Purpose Audits. Principal recipients of state support identified as receiving substantial budget subsidies have been identified as candidates for special purpose audits (para. 61.(ix.)) to monitor the use of public funds. For purposes of the Second Tranche Release Review, planned for the fourth quarter of 1996, the audits will be based on performance in the first half of 1996. F. POVERTY CATEGORY 65. The proposed SECAL supports government policies that aim to make coal sector restructuring socially sustainable. This will be accomplished in part by strengthening the existing social safety net to meet the needs of those most affected by restructuring: redundant coal sector workers and their families and communities. The social reforms that underpin the proposed SECAL are an integral part of the Government's program for coal sector restructuring, which includes both support for the maintenance and operation of essential social assets divested by the coal industry and community support and employment programs designed to address the particular needs of towns and settlements which are unusually dependent on the coal industry. The SECAL will be in the category "Program of targeted interventions". G. ENVIRONMENT 66. Environmental Assessment. Environmental issues are potentially important in mine closures. The Bank undertook an extensive review of the environmental problems of the coal industry in preparing the 1994 sector report. This review concluded that the most serious environmental problems in mining areas were linked to the burning of coal rather than to mining activities per se. Apart from a small number of localized issues, the main weaknesses in the environmental performance of mining were the consequence of poor incentives and bad management that sustained inefficient mining practices encouraged by a focus on meeting output targets. Thus, reform of incentives and operating procedures combined with the closure of the most inefficient mines, which tend to cause disproportionate environmental damage, will reduce the environmental damage caused by the industry. 67. Specific measures will be required to ensure that mine closures occur in an orderly manner that takes account of the need to cap operating or disused shafts, to minimize risks associated with the accumulation of gas in old mine workings, and to deal with any problems following the flooding of old workings. Design institutes and other organizations have experience in preparing plans and implementing the appropriate measures, though there is a tendency to opt for over-elaborate schemes which concentrate too much on the recovery of equipment that cannot be economically justified. 68. Environmental Rating. The proposed SECAL is not expected to result in any significant negative environmental impact. The proposed SECAL has been rated "Category B" for Environmental Assessment. Moreover, under the proposed companion IAP, technical assistance will be provided for managing the environmental rehabilitation of lands disturbed by past mining operations. The IAP will also provide assistance to the federal and regional authorities responsible for developing, reviewing, and monitoring the implementation of mine closure plans. The Appraisal mission reviewed these issues as part of the discussions on the draft Mine Closure Guidelines. H. PROPOSED COAL SECTOR RESTRUCTURING IMPLEMENTATION ASSISTANCE PROJECT 69. To meet the challenge of translating its reform agenda into effective actions, the Government has requested that the Bank finance a Coal Sector Restructuring Implementation Assistance Project (IAP) to -21 - support the implementation of: (i) special approaches to respond specifically to the needs of local communities affected by coal restructuring; and (ii) Government's program for coal sector restructuring generally. 70. There is a need for: (i) improvements in management of the restructuring process through increased participation of stakeholders as well as enhancement in transparency and openness; and (ii) filling critical skill gaps and capacity building in a number of key areas which are essential to design the details and implement the restructuring program effectively. The proposed IAP has been designed to address the above concerns through the provision of necessary implementation assistance identified by the key stakeholders. In this connection, the Bank has been instrumental in the mobilization of financing from the international community to help prepare the program, including the United States Agency for International Development (USAID), the UK Know-How Fund and the Policy and Human Resource Development (PHRD) Japan Grant Facility (JGF). 71. Sustainability of Coal Sector Restructuring. The IAP would build upon ongoing efforts which provide support for the implementation of the coal sector restructuring program and assistance to the affected people and organizations. Based on the results of consultation with key stakeholders, including social assessment in two coal basins (Pechora and the Kuzbass) affected by the mine closures, the project would comprise the following main components: (a) supportfor stakeholders participatory activities, including support for: (i) the Government's efforts to improve industrial relations and social partnership in the coal sector; (ii) the IAC (both federal and regional commissions); (iii) trade unions; (iv) local governments and the Association of Mining Cities; (v) independent coal enterprises and their association; and (vi) public relations to enhance trust and to create reform constituencies; (b) socialprograms, including: (i) continuous social assessment and social impact monitoring in coal mining regions; (ii) provision of consultant services, training and computer equipment for the design of improvements in social protection of coal industry employees, management of social asset operation and maintenance as well as design of community support and employment programs in Kuzbass, Eastern Donbass, Pechora, Moscow and Kizel coal basins; and (iii) implementation of pilot activities of community support and employment programs in the above five coal basins; (c) strengthening subsidy management to enhance transparency and financial accountability through provision of consultant services and computer equipment for improvements in: (i) allocation; (ii) reporting; (iii) monitoring; and (iv) arrangements for independent audits of recipients of state support in accordance with international auditing standards; (d) technical assistance and training for commercialization and demonopolization of coal conpanies, including provision of consultant services for: (i) the preparation of business plans of coal companies; (ii) development of a framework for trust management of mining companies, including preparation of a model agreement; (iii) the bidding process to select the trust managers; (iv) development of measures aimed at attracting investments in the coal sector; and (v) management and financial training; (e) technical assistance for environmental management through provision of consultant services to strengthen the capacity needed for environmental management, including legal and financial aspects, to remediate the adverse impacts of coal mines included in the restructuring program; -22- (f) technical assistancefor mine closure guidelines, including provision of consultant services for the legal, organizational and informational support for the development of procedures for closure of unprofitable mines; and (g) Support to REFORMUGOL, including provision of consultant services and computer and office equipment to strengthen the capacity of REFORMUGOL (see para. 72). 72. A Project Preparation Unit (PPU) was established in the Ministry of Economy in October 1995 to prepare the proposed Coal SECAL and, subsequent to its identification in March 1996, the TAP. The Project Implementation Unit (PIU) will build upon the current PPU in terms of staffing and lessons learned. The PIU, to be entitled "The Foundation For Promotion Of Restructuring The Coal Industry" (REFORMUGOL) would be established in the form of a non-commercial foundation. The founders would include the State Property Committee (GKI), Federal Center for Project Finance, and Association of Mining Cities. The Presidium of the IAC would be the Trustee Council overseeing REFORMUGOL. Staffing of the PIU is expected to be built up gradually, first with the appointment of the Director General, Director for subsidy management and a deputy director to coordinate activities under the proposed Project. In addition, other key managers are expected to be appointed shortly, including two directors to cover: (a) institutional support for the IAC; and (b) social monitoring and information on restructuring, respectively. In general, technical assistance and training activities will be carried out by a partnership of foreign and local consultants, with a view to building up the capacity of local consultants over time. Pilot activities for community support and employment programs would include contracting with community based organizations (CBOs) and non-governmental organizations (NGOs) as implementing agencies, based on an operating procedure acceptable to the Bank. The Project would be implemented over a three-year period. With a view to minimizing implementation delays, a procurement consultant is being mobilized by the PIU to assist in key procurement activities under the Project. VI. BENEFITS AND RISKS 73. Benefits. The proposed Coal SECAL would support the effective implementation of a far-reaching restructuring program in one of the most critical sectors of the Russian economy. The program will promote an increasingly profitable and competitive coal sector through judicious closure of unprofitable mines, demonopolization and commercialization of regional coal companies, and further improvements in operational efficiency over time. This would, in turn, decrease and eventually eliminate subsidies and the related impact of the coal sector on the federal budget. In addition to economic benefits, the restructuring program would promote sustainability of the coal industry through a participatory approach by key stakeholders and capacity building in key areas, including improved measures to mitigate social and environmental impacts in the affected areas. 74. Risks. This is a highly risky operation. The major risks involve the ability of the Government to deliver on policy reforms, stemming in part from political uncertainties and difficulties in maintaining a sustainable program of stabilization and structural reform. Even without the political uncertainties, reaching a consensus on the needed reforms and implementing them will be difficult since the reduction and redirection of subsidies, the closing of mines and the de-monopolization of the sector threaten major vested interests and face strong resistance. Moreover, the Government's institutional capacity to implement the complex social and structural reforms proposed is undemonstrated. 75. As a two-tranche, quick-disbursing operation, the proposed Coal SECAL by itself cannot provide sustained Bank support for the Government's coal restructuring initiatives over the medium term. The risk that the restructuring momentum will not be sustained is addressed through assistance provided under the proposed Coal Sector Restructuring Implementation Assistance Project, which is longer in duration - 23 - and will serve as a vehicle: (i) to assure Government that the Bank intends to remain engaged in the sector beyond the life of the proposed SECAL; and (ii) to help strengthen the institutional capacity of the Government to implement the reforms. Progress on coal sector restructuring over the last 2-3 years, together with the commitments in the Government's Policy Letter, provide a reasonable assurance that the reforms will continue if implementation problems can be addressed. VII. RECOMMENDATION 76. Recommendation. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank and I recommend that the Executive Directors approve it. James D. Wolfensohn President Attachments Washington, D.C. June 5, 1996 nPEJCEaATEJIb AnnexI rIPABHTEJIbCTBA POCCHRCKOl 4DE,2EPAL1HH Ir. OCKBA t,22 tv maq 1996 r. 1748n-F2 YBa>KaeMbli rocnouHH ByjT4eHCOH, B COOTBeTCTBsH C Z(OrOBopeHHOCTAMH HaCTOAWL4M HanpaBAsio BaM nHCbMO C H3JIO)KeHmeeM nOfJIHTHI4 rlpaBHTejTbCTBa PoccUiHcxoiU cDe,epauHI4 B yrOJInHOr npOMbllliieHHOCTII. C yBawKeHmeM, B.HqepHOMbipxrnH rpe3areHTy MeKayHapOZxHoro 6aHxa peKOHCTpyKXU ui pa3BMTIIS r-Hy LKeHMCy Byji4eHCOHy r.BaLuHHrTOH, oxpyr KoJIyM6Hs CIJA Annex I -26- Page 2 of 34 Annex I -27 - Page 3 of 34 0 nOnHTHIKe IpaBHTejnbcTBa POCCHiCICOii cIegepauHH B VroJibHOH npONibiHuJIeHHOCTH 1. IlpaBHTeJibCTBO PoccHHcXoio 'PeaepaumH HorOTOBsHTio H npHCTylIwIlO K OCy1leCTBJIeHMIO KOMniiexca Mep, HarpaBIeHHbIX Ha npeo6pa3OBaHHe npOH3BOQCTBeHHOH H OpraHH3aUiHOHHOI CTpyKTyp yrOJIbHOH OTTpaCJH 1IA nOBbiLweHHAl ee 3:)3ceXTHBHoCTH H Ha pemeHme couLHajbHO-3KOHoMHTIecxHx npo6nieM yrJIez,ao6bIBmaoHx perHoHoB. B pamKax 3TUX mep npexycmorpeHa nepeopKeHTaulsl BbSlaeeMbIX 6i0z1xeTHbIX CpeZCTB C 4HHaHCHPOBaHHA yrneao6blMH Ha (HaHCHpoBaHHe Mep no peCTpYXTYpl3aUHmH YrOIbHOr oTpaCjiH, B TOM Micnie Ha JIHKBHUaaZi4io y6blTO4HbIX U Herepcne TBHbX 1iiaXT H pa3pe3OB, COLHajibHy1O 3aiL.umTy BbICBo6oicRaeMbix pa6OTHHKOB Ui o6ecnexeHHe peHTa6eJIbHOCTH1 yrJIeeo6biT1H Ha OCHOBe nepcneXTUBHbIX H CTa6MJIbHO pa6OTaiowmx yr3ieao6blBalonIHx npe,zripHATHr. HaMeleHo BHe,apeHme HOBOrO MexaHH3Ma pacnpeaejieHt4A CpeaCTB rocyzLapCTBeHHog novep)KxH, o6ecnereBaiowero 6onbLuyio rfIaCHOCTb H OTKpbITOCTb H yCHJIeHHe (OHTpOJIA CO CTOpOHbI IlpaBHTeJIbCTBa. Mepbl no COBepLueHCTBOBaHIIO opraHH3auHOHHOH CTPpyCTypbl yrOjibHOH npOMbilL.-eHHOCTH npe,uycmaTpHBaEO,T eUeHTpaJIH3aUmio ynpaBieHA u CO3zXaHHe KOHXypeHTHOR Cpeqbl B yrJObHOR OTpaCnu. (DaKTH!1eCKH pecTpYXTYpH3alUS1 yrOJIbHO9 rTPOMbIlUiJIeHHOCTH HaBJaIaCb B 1993 roxay. Pa3Mepbi rocyAapCTBeHHoH nozIAep)KxH yrOJIbHOA oTpacJIM 6buHII CyUJeCTBeHHO coKpaLUeHbl - C 1,04% BaTIOBOFO BHYTpeHHerO ripOZrYKTa (BBHI) B 1993 ro,ay Ao 0,45% BBHl B 1995 rouTy. 4oms cpeaCTB tezkepajTbHoro 6iozKeTa B o6iueM o6leMe 4HHaHCHPOBaHAS yrOJIbHOH nTPOMbILLJIeHHOCTH yMeHbIlHllaCb C 77% B 1993 rolty ,uo 31% B 1995 rozty. IlpexpaLueHa ao6bfLa yrnI Ha 37 y6b]TOLHbzX [uaXTax. qIHcJIeHHOCTb 3aHATbIX Ha npOH3BOZ=CTBe B YFOJIbHO14 rTpOMbiLuIeHHOCTH coxpaTUTacb C 626 TbICSAM LeJIOBeK B 1993 roay zlo 529 TbICAq 4eJIOBeK B 1995 rozy. OKoJio 73% o6ieKTOB COuHaJIbHOR C#epbI B LuaXTepCXHx ropozax H nocemxax nepezraHbl c 6aniaHca yrjieao6bTBaioLu.x ripeqnpHSTH9 B BeaeHHe MeCTHbIX opraHoB BTIaCTH. rO,D;OBOi! o6feM qo6biqi yrim CH43HJIC5 c 305,5 MJIH. TOHH B 1993 romy ,o 270 MJIH. TOHH B 1994 roz,y H ,O 263,3 MJIH. TOHH B 1995 ro,Ay. B OTmIHtIHe OT rlpOrpaMM peCTpyKTypH3aLimH yrOJTbHOUi rTpOMbILLIJIeHHOCTH B xEpyrmx CTpaHaX, raLe coxpauieHIe rTpOH3BOZCTBeHHbIX MOLLHOCTeU JOCTHrajiO 80-90%, yrOJIbHa npoMbiwiTeHHOCTb PoccHH nocJIe ee pecrpyKTypH3aumm OCTaHeTCA OAHOU H3 xpynHeiUilX B MHpe, a ee npO,TyKUHA CTaHeT KOHKypeHTOcnOCO6HOH xaK Ha BHyTpeHHeM, TaK H Ha BHeWIHeM pblHKaX. AnnexI -28- Page 4 of 34 2. CTpaTerHS peCTPYKTYPH3aUHH yrOJlbHOHr npOMblw.1eHHOCTH 2.1. L2o.irocpO4HaH CTpaTeri B 1993 roay 6bula co3jaHa MeWCBeaOMCTBeHHaA KOMHCCHA rIo COULHaJbHO- 3KOHoMmH,ecKHM npo6nieMaM yrnego6bIBmiaolx perHoHoB (iaJIee - Me>KBeAOMCTBeHHaS KOMHCCHS), COCTaB KOTOPO YTBep)KIeH nOCTaHOBJIeHHeM rIpaBHTeJbCTBa PoccHiCK0oii DeJAepauIM. IHpeaceUaTeJieM ROMHCCHH 5BJJIeTCS HlepBblii 3aMeCTHTeTib rlpeaceaaTejA rlpaBHTeJIbCTBa PoccHiicKoR (DeaepaIw4H. B COCTaB MeCKBeqOMCTBeHHOR KOMI4CCHH BXOZLHT pyXOBOa24TejuI MHHHCTepCTB H BegOMCTB, HeriOCpeRzCTBeHHO y,4aCTByIOWHX B peCTrpYXTYpH3auH yrOnbHO9 npOMbiUl.IeHHOCTH, rIiaBbi aZa;MHHHcTpau4ir OCHOBHbIX yrJIeqo6bIlaaowiHx perHOHOB, pYKOBOXjHTejiH YFOJIbHbIX HIpOCOI030B H PYKOBOaU4TeJim npelJnpHSTHR yrOJIbHOH npOMblIIIJIeHHOCTH. 14 iiofloM 1995 r. HlpexIceaaTeJIeM Me>KBeaOMCTBeHHOR KOMHCCHH YTBepX)KaeHbl "OCHOBHble HanpaBJIeHHR pecTpyxTypH3aUHH yrOJILHO0 npOMbIUiJIeHHOCTH", B KOTOpblX oTpa)KeHbI OCHOBHbie 33ieMeHTbl qOjTrOCpO0HO9 cTpaTerHH rlpaBHTejibCTBa: (a) BbuLeAeHHe 6ioaJKeTHb6X CpeaCTB Ha BO3MelueHe y6blTKOB npOK3BOACTBa rocTeneHHoe coKpatueHie o6feMoB rocy[apCTBeHHO14 nozFeplcKX4 YrOJIbHOA npOMbihuJIeHHOCTH ABjiAeTCS CyLueCTBeHHOrU EaCTbIO nporpaMMbl MaKpO3KOHOMH,eCKOiK cTa6uJIH3aUi HapOZHOrO X035liCTBa PoccHH H cipaTerTH C03zaHHA peHTa6eJIbHOA yrOJTbHOr4 oTpaCjTH, Ete9CTBy1OL1eA B pbIHO0HbIX yCJIOBH4X. FlpaBHTejTbCTBO coKpaLuaeT BbijeJieHme 6ioaweTHbIX CpeaCTB Ha H36HpaTejibHylO nozriepwKKy LUiaXT, KOTOpbie He B COCTOAHH14 nOKPbIBaTb CBOU rIpO43BOaCTBeHHbie paCXO,abl 3a cTeT cBo6ogHoro ueHoo6pa3oBaHwiA Ha YOJIbHyIO lpOZYKuLUlIO. (6) HHBeCTH[LtH Mo,xepHH3aUHA, peKOHCTPYKUMA H pacumpeHHe npOM3BOTCTBa 6yryT ocyLueCTBJIATbCA 3a c,4eT co6cTBeHHbIx cpeaCTB yroJbHbIX KoMnaHmrW, 3aHMOB, a TaK)K e 'aCTHbIX OTe,eCTBeHHbIX H UHOCTpaHHbIX KanFlTajioBJIO>KeHHrl. Bbixen5leMbie Ha 3TH iJejiM Cpe,CTBa rOCyZI=pCTBeHHOR nofZepU;KKH 6yZIyT cnoco6CTBOBaTb pa3BepTbIBaHHIo HHBeCTHUHOHHOU aeqTejibHOCT4. 3. Annex I -29- Page 5 of 34 (B) JIlHBHUaLauHi y6blToqHbIx H HenepcneICTHBHbIX yrnieao6biBatoLuHx npegEnpHHTHH, nepe,aaa HenpOcpHubHbix npernpHIpTHu By,aeT Ji4KBHiUIpOBaHO He MeHee 90 y6bIToMHbIx ULuaXT H pa3pe3OB CyMMapHOR MOLIHOCTbiO 60 MHJIIHOHOB TOHH B roa c o6LUeri qiCJieHHOCTbIO 3aHATbIX 83 TbJCAM1H qejiOBeK. 11o mepe BblBOJIa U3 COCTaBa yrOJTbHO9 oTpaCJIT Henpo4HJTHbWX npOH3BOJaCTB rlpOH3oareT gaJIbHeiRwee yMeHbweHHie lHcjTeHHOCTH 3aHsTbIX Ha 175 TbICAM lqeJIOBeK. (r) Mepbl B COUHaSjbHOU c4pepe CMArlIeHHe HeraTHBHbIX CoUHaJThHblX rOCiZeaCTBHi pepCTpyXTypa3aLu 6yZeT o6ecneqeHo c noMoLILbIO pSuaa mep no no=ep)KKe 3aHATOCTH, ocyLjecTBjiAeMbIX O,aHOBpeMeHHO C nporpaMMaMH C03aaH1H HOBblX HeaOTHpyembix pa6oqHx MeCT, BbinJIaTaMH noco6mi H KoMneHCaUHlHr pa6oTHmUaM, BblICBo6o)KaaeMb6M B CBS3H C pecTpyXTypM3auHe9 yrOJIbHOH npOMbLIilieHHOCTH, ineHaM MX ceMeu, neHc4oHepaM, paHee pa6oTaBUIUM B yrOJIbHorI ripOMbbIJIeHHOCTH, HHBaIiHZamM H iiieHam CeMeUi yMepLuHx LuaxTepoB. KpoMe Toro, 6yxreT 3aBeplnleHa nepe,aaqa o61,eXToB CoLUHajibHOUi C¢epil B BegeHHe MeCTHbIX opraHOB BjiaCTI. B aaibHeHuieM 6yzeT npoBe.aeHa pecopMa CHCTeMbl ynpa1BjieHHA COLiHajIbHOH HH#paCTpyX(Typorl H pe4)opMa OTHOwJeHHR Co6CTBeHHOCTH. (z) 3aiuuTa oicpywaiouei cpembI FIpaBhiTeJIbcTBo C4uTaeT CBoeu 3a2J;aqeH cMArqeHHe Bcex 4)OpM He6JIaronpH5THoro B03zei4CTBMA nH,KBHJauuHH waXT Ha oKpy>KaioLUyio cpezry. TeXHHieCKHe n:iaHbl MepOnpH5!THH no JIHKBHuauHH LLaXT H4 KOHTpOMO 3a BblbOJTHeHHeM Tpe60BaH14u, coxIepxKaagxCq B npHpoXooxpaHHbIX pa3,aeniax YTBep)KxreHHbIX nfIaHOB, pa3pa6aTbIBalOTCA C yqacTmem xOMneTeHTHbIx npi4pOz0ooXpaHHbIX BeJoMCTB. HaMeqeHo npoBeCTH mccXieaoBaHi4e IpUHOpHTeTOB H BapmaHTOB peLueHUis 3xo3IOrH'eCxHX npo6IieM, nlopoKeHHbIX B lpolJIOM yrJIeZIo6biBawowuMm npO43BOXJCTBOM, iH pa3pa6oTaTb pexomemaaauuJ nO Co3,aaHHIo opraHH3auuHOHHo0 H cHHaHCoBoH cxeM, a TaK)Ke HopMaTHBHOui 6a3bl ,M peCyKJITHBauHH 3eMeYEb, HCnOp'eHHbIX yrneao6blBaiou4M ripOH3BOrCTBOM. (e) flpeo6pa3oBaHHe CuCTeMbi ynpaBseHHs, KoMMepLwUaH3aLUHA H ,aeMoHonoAH3aLuH.q rpaBHTenbCTBo ripHlMiiaeT Mepbl, HanpaBj1eHHble Ha aeueHTrpaIIH3auHi0 ynpaBjIeHHA1 u IOPMHPOBaHHe yCjiOBHI =A C03,aaHHA peHTa6e.JbHbIX YrOJIbHbIX YCoMnaHIH4 H KOHKypeHTHOH cpejibl B yrjieaO6blBaioLaeR oTpacJIH. ,OjiA cIegepaMbHO4 4. Annex I -30- Page 6 of 34 COtCTBeHHOCTI- B yrOJ7bHOH npoMb1LUIJIeHHOCTI4 CHM3HTCA B pe3yJIbTaTe npHBaTH3auHm, nocrie Lero yrOJIbHaia OTpaCJIb 6yaeT COCTOSTb B OCHOBHOM 13 HeCKOJIbKHX He3aBcCl4Mblx, caMo4fHaHcmpyeMbIx, KOHKypMpylOLOux Me>K.Dy co6o0i yrOJIbHbIX K(oMnaHIlid. FocyaapcTBeHHoe npeanpslTtie "POCyrOJIb" 6yzaeT npeo6pa3oBaHo B aKUHOHepHOe o6LueCTBO, ueJIH KOTOporo 6yryT COOTBeTCTBOBaTb UeJTIM peCTpYKTYpH3auUH yrOJIbHoU ripOMbiluJIeHHOCTH. 2.2. CpexAHecpO4Hbie UeJUH B COOTBeTCTBHU C OCHOBHbiMli HarpaBeHMAMH peCTpyKTypH3auHm yrOjTbHO npoMblwLIIeHHocTH" rlpaBHTeJIbCTBo onpeaeiHJIo H npHCTynHjIo K peaHIH3auHm xomnrieiKca CpeAHeCpO4HbIX MepOnpASTH9. 9 4eBpajiA 1996 r. HIpe3HaeHT POCCU4UCIKOU OejepauHH no,nuican YKa3 Ng 168 "O mepax nio ,aaZ,IbHewUJeMy COBepLUeHCTBOBaHHIO CTpYXTypbl YrOJIbHOH npoMbilluJIeHHOCTH PoccUUiCiKoU COeepauM", KOTOpblU gaeT nOJIHOMOHSH 1HIpaBHTembcTBy no yCJImeHHIO permOHajIbHibX yrOJIbHb1X KoMnaHHHi 1 nepe;xate rOCy,TmpCTBeHHb[X naKeTOB axuWH yrOJIbHblX KOMnaHUr B JOBepHTeTbHOe ynpaBJIeHue pa3JIH'HblM areHTaM, a TaKxKe no npeo6pa3oBaHMno roCyzxapCTBeHHoro npezinpHATMA "Pocyronbm" B axuwioHepHoe o6LuecTBo C 3axpenJ1eH0em 100% ero aKLjHh B ,eaepaAbHoi CO6CTBeHHOCTH CpOKOM Ha T-pH ro,;a. B PeBpane 1996 rozaa MeIKBeaoMCTBeHHO9 KOMHccme1 6blJIU paccMoTpeHbl H yTBepCx1eHb1 nporpaMMbl CoLXHaJIbHo-3KoHoMImxecKoro pa3BHTH1 p5Pa yrrie,ao6blBaiowux PerU4OHOB POCCHH (rle4OPCKOrO YrOJIbHoro 6acceUHa, rOLZMOCKOBHoro yroIbHoro 6acceAHa, Ky36acca) H ozro6peH npoeiKT npOrpaMMbI no BOCTOtIHOMY AL1OH6accy, a TaKXwe ripeaCTaBJIeHbl peKOMeH_jaiU4 no 3aBepujeHHIO B 1996 rojry nOJLrOTOBKH aHaJIorHiXHblx nporpamm zD;i apyrux yrnez(o6blBaboalrx perHOHOB CTpaHbl. 2.3. KpaTKocpo'Hbie MePbl BnepBble B npaKTHKe roCyzIapCTBeHHOUi nOaaeP,KKH yrOJIbHOll npoMbIlwleHHOCTI Ha 3aceaaHM11 MemBe,zoMCmeHHOri KOMJ4CCH4 npIlHHT inaaH- rpa#1x pacnpeta;eji CpeaCTB rOCyrapCTBeHHOR noaaepxcXH, Bbi=JIeMbiX oTpaCJIM B nepBOM no.IyroZuni 1996 roza, c pa36HBxouI no nonyytaTe.iM H HanpaBJIeHAM uejieBoro CnOJIb3oBaHHA. AHajiorUixHbiri nfiaH-rpacuHK Ha BTOpOe noJIyro,uie paccMo-rpeH MeaKBeroMCTBeHHoA KoMHccHeri 20 MaA 1996 roaa. Ha 3aceaaHMH Me);BeaoMCTBeHHOA KOMUCCUH 26 4eBpaym 1996 roaa oao6peHo H nrOCTaHOBJIeHHeM rpmaBITeubCTBa Ng 598 OT 17 maq 1996 r. yTBep)KfEeHO Annex 1 -31- Page 7 Of'My[oSeHHe O rOCyaapCTBeHHOM bHHaHCHpOBaHlM MeponpHSTH9 no pecTpyxTypH3aulH yrOJIbHoH npoMbiwJIeHHOCTH", onpezjeJuiowee nop5,1xKo pacnpe,aejieHuiA cpeaCTB rocyaapcTBeHHog noz.epoKxm no nojyy'laTeJlSmM U HanpaBJIeHHU1M UeieBOrO HCnOJIb3OBaHMA. Yxa3aHHbie peLweHHS AIBIOTCS BaXKKH Ha 9% B peanJbHOM H4cqHcYieH4H no CpaBHeHHIO C 1995 rozoM. B 1996 rozry npimetiOTCA cUIetyIoLume xaTeropHH pacXOXEOBaHH5I CpeaCTB rOCy,aapCTBeHHOr rioz1zep>KXH yrOJIb HoU npoMbiwJIeHHoCTIH: A. PocyzIapCTBeHHaS no=ep'Kxa pecTpyKTypH3auuH yroJIbHoH npoMbIIuIeHHOCTH; B. BpeMeHHaA rocyuapcTBeHHa5 no=epKxia yrnejo6bIBaiowero npOIl3BOACTBa; B. Ho=epxKXT 41HHaHCHpOBaHHIO Hepe3 o6wHe TpaHc4epTbl cy6-bexTaM PocciurcKoii (DellepaUHH). 3.2. PacnpeaenieHie cpeaCTB rocyaapcTBeHHoR no=epwim yrolbHOfi npoMbimlJleHHOCTH. B pamxax o6tueg CyMMbi CpeaCTB rOCyZiapCTBeHHOH no=epWxH, BbiZlejieMbIX B 1996 ro,Uy, Hame,{eHo BHJOH3MeHHTb ee CTPYXTYpY C TeM, MT06bi yBejIH4MTb JoMo CTaTel paCXOaOB, npeaHa3Ha!IeHHbIX JTA CrpyKTypHOri nepecrpouxH YrOJIbHO oTpacJIH H wrIA Colep)KaHHA H pa3BHTMA o6beKToB CoUHaTibHoij Ccepbl B yrJIeo6E6bIBaiouwx perHoHax. B COOTBeTCTBHH C KniaCCmH4KaUmeH, ripHHITOH B "1IO.iO)*eHHH O rocyaLapCTBeHHOM 4IiHaHCHpOBaHHH MeponpHASTHir no peCTpyYITypK3aui4m yroJIbHoH npoMbilIL-ieHHOCTH", B COCTaB pacumpeHHOri KaTeropmH (A) "rocyaapcTBeHHas no=epiKXa peCTpYKTYpH3aUmH yrOJIbHOH npoMblIJIeHHOCTH" BXOZEAT: (1) TeXHHuecKHe pa6OTbl no JIHKBH.aLUHH y6bIToqHbIx H HenepCnelKTHBHbIX yrOJIbHbIX LuaXT H pa3pe3oB; (2) paCXO,abl Ha coURaJIbHYIO 3awlUTy BbICBo6oKiaeMbix pa6OTHHXOB U qJIeHOB HX ceMei, a TaK)Ke neHCHOHepOB H HHBaIiH2oB, paHee pa6oTaBUIHx B yrOJIbHori npOMbIU1jeHHOCTH (B 3Ty nOaKaTerOpHIO BXOZUST rlpOrpaMMbl MeCTHOrO pa3BHTHS H o6ecneqeHHA 3aHATOCTH - CM. Pa3zle.I 4.1); (3) noco6HA no HHBaJIHXHOCTH H rinpoeccHOHajIbHbIM 3a6ojieBaHHsM pa6oTHHKaM JIHKBHIRHPOBaHHbIX LiaXT; (4) pa6oTbl no CHOCY BeTxoro H CTpOHTeNjbCTBY HOBOrO )KHJIhSI B LuaxTepcxHx ropojaax H nocenxax; (5) xarilHTaJIOBJIo)KeHHM B TeXHHYeCKOe nepeBoopy)KeHHe H peKOHCTpY1(LIHIO ,ueACTBYIOWHX waXT H pa3pe3OB c ueJIbIO o6ecneqeHHA Hx peHTa6enbHOCTH; (6) KariHTaJIOBJIO)KeHMA B CTpOHTeJlbCTBO HOBbIX peHTa6ejTbHbIX YrOJIbHbIX waXT H pa3pe3OB; (7) Hay4HO-TeXHHteCKoe H npoeXTHoe o6ecneqeHHe; -7 Annex I-33- Page 9 of 34 (8) OTqHCIeHHA B UeHTpaJiH3oBaHHblH pe3epBHbIA cOH AU UIOKpblITHAS paCXOX[OB, CBI3aHHbIX C HeC4aCTHbIMH CJIyqa3tMH, KaTacTpo¢amm H npOMUmH noAo6HbIMM COFbITHAMM. B COCTaB pacwmpeHHOiH xaTeropmm (B) "BpeMeHHaA rocyzapcTBeHHa3i no,aep>Kxa yrJIeao6blBaiowero npOH3BoqcTBa" BXO)ILHT: (9) H36HpaTeJTbHas nozaepcxca yrJieao6blBaiouLux npeanpHATMR, He CnOCo6HbIX B03MeCTHTb CBOH nlpOM3BO-ICTBeHHbie paCXOrbl 3a cdeT JIOXOTAOB OT CBo6OX,HbIX pbIHO0HbIX UeH Ha yrOJIbHYIO flpo0JLuIHO (cy6cHauH Ha nOKpbITHe rIpO03BOZLCTBeHHbIX y6biTxOB); (10) pacxo,bi rpeCarpHATHsu H opraHHaui4u yrOJIbHOH npOMblu.TIeHHOCTM H uIaXTHoro cTpoHTenJIbCTBa no peaJuIH3auu oTpaciieBbIX TapHuHbix cornaLeHMii; (I1) cozxepKaHiie Haxoa SLUHXCS Ha 6aiiaHce npeCrpHASTHMA H opraHH3aUHri yrOJTbHO9 nlpOMbiluJIeHHOCTH 06obeYTOB CouUHajibHOA CqJepbl, He nepeaaHHbIX B BeJIeHHe MeCTHbIX opraHOB BJIaCTH. B g1onomieHHe K 3TOMy, Ha BTOpYIO rJOJIOBHHY 1996 roz;a 6yzeT BBez(eHa HOBaA xaTeropU4 (B) "rlozxep*Kxa o61beKTOB COl1Haq16HOA c¢epw, nepenaaHblx C 6azaHca yrOJIbHbIX npez(npHsTHf B BeaeHHe MeCTHblIX opraHOB BjiaCTH", BKMOqaioiuaA Bbirli1aTbl MeCTHbiM aRzMMHHcTpaUH3lM Ha uejiH cMHaHCHPOBaHHS coaep)KaHHA H pa3BHTMA 06oheXTOB COUJRabHOA C4epbi, nepeqaHHbIX B BegeHHe MeCTHblX opraHOB B.iaCTH. 20 Maq 1996 roza MeKBezOMCTBeHHaA KOMHCCHA o;Io6pHna rpaciiHx pacnpexrejieHHA CpeaCTB rOCyqapCTBeHHOri nozCep>KKH yrojibHoH oTpaCJI4 Ha BTOpOe nojiyrou-iue 1996 roaa. Fpa¢4K pacnpeaejieHuH3 CpeaCTB rocy2apCTBeHHOi no=epwKH yrOjbHOH npomMbiLu1eHHOCTH Ha BTOpoe nojiyro,ue 1996 roga rpexycmaTPBaeT Bbi.eJIeHme: (a) He MeHee 1,6 TrplJ1JHOHa py6nerl cy6,beKTaM (Degepaiux u1 MHaHCHpoBaHHS HX PaCXOZ(OB Ha pa3BHTHe, 3aMeHY B cJiymae Bbi6blTH5A, peMOHT, COtep)KaHH4e H 3KCmijyaTaLuHo 06'beKTOB CouHaabHog C4)epbl, nepeaaHHbix npearipIH5THuAMH YFOJIbHO OTpaCJIH B BeaeHHe MeCTHbIX opraHOB BnaCTH; (6) cyMMapHO He MeHee 200 MHiJIiapaOB py6neu KeMepOBCKOI o6iiacTH, Pecny6inHKe KOMU, POCTOBCKOU o6.iiacT, HIepMCKO o6iiaCTH ii TyJIbCKOU o6nacTJ JUIHHaHCHpOBMHIA UX paCXOAOB Ha fIHJIOTHbie IporpaMMbl MeCTHOrO pa3BHTH4 H o6ecneqeHHl 3aHATOCTH xJIAI LuaXTepCKiX par4OHOB, paCnOJIO)KeHHbIX Ha TepptTOpHH yia3aHHbIX cy6-beKTOB ZeaepauHH; (B) He MeHee 300 MHjLiHaPBOB py6nieu YrOJIbHbIM K0MonaHHAM WJIA 8. Annex I -34- Page 10 q>34aHCMpoBaHHS mx paCXOaOB Ha COUHaabHY1O 3aWHTY pa6oTHMKoB LLaXT, 6bBmuTX pa60THHKoB ULLaXT H qj1eHOB UX ceMer. FIpi pacnpeaeYIeHi-r 6ioeTHbIX CpeaCTB rOCyaapCTBeHHOUi rioAaepKXH YFOJIbHOI npoMbiluIeHHOCTH (mcxKoqas bHaHCHpOBaHme nepezIaHHblX B BeaeHHe MeCTHblX opraHOB BjiaCTI o6-beKTOB COUHaJIbHOU c4)epbl) B 1997 rozly 6yAyT YqTeHbl cnezuywoLuHe noJIo>KeH4A: (a) He MeHee OaHO TpeTH OT o6Luero o6-beMa cpexcTB rOCyXapCTBeHHOH noriozep>KKH yroJIbHoH npOMblwiUeHHOCTH 6yaeT HanpaBJIeHo Ha TeXHHuecKHe pa6oTbi no JIHYBHqauuuHH LuaXT H pa3pe3oB, couzazjbHy1o 3aLUHTy, BKJIIoqaS HlporpaMMbl MeCTHOrO pa3BITHA H o6ecneqeHHs 3aHSTocTH, H noco6Hs no HHBaJIMXaHOCTH HeTpyrOCliOC06HbIM pa6oTHHKaM JIHKBHZHpOBaHHbIX B HaCTOALuee BpeMS wLaxT; (6) o6uHi1 o6fbeM cpe,aICTB rocyaapCTBeHHoH roz1Ltep>KKH yrOJIbHOu npoMbILHJIeHHocTH, HCKnOqaAS CTaTbH, nepeCqcjieHHbie BbiiJJe B IYHKTe (a), a TaKmKaeHHUR nnaHa-rpa#wKa pacripeCejieHHS CpeaCTB rocyZIapCTBeHHOri floUepxKKH no nonyqaTenim (c BblJIe:ieHHeM HanpaBJieHHH HCnOJIb3OBaHHA) 6yayT 3aKxJOqaTbCS corJIaweHHl4 o uejieBoM HCnOJlb3oBaHliH 6io;gxeTHbIx cpeaZCTB, a TaKiKKH (iopjzHzecxiiMH iiHLIaMH, OTBeIaIoWtfMH 3a MeponrIPHAsTH no peCTpyKTypH3aUHt4, - VrOJIbHbIMH IoMnaHHSUlH H HHbIMH opraHH3auHSMH). HojTy4aTeJI CpeZICTB roCyaapCTBeHHOi rioztaep)KKH AOJIXKHiac. cHcTema COuHaJIbHbIX rapaF.T uuI pa6oTHnoKB, Bb]CBo6o0(,aaeMbiX C npeanpHATHi. IIpaBHTeJIbCTBO o6ecneqUlT cJiezlyIoLLHe Mepbl: - BblnJIaTy BbICBo6o)0KaeMbIM pa6oTHrnaM 3aKOHoqaTeJibHO yCTaHOBJieHHbIX BbIXOXtHblX noco6uu H4 xomneHcaulig B cooTBeTcTBII C pae9CTByIOIiUHM 3axoHoaaTeJTbcTBoM; - XOOpZIHaHUHO JaeATeNJbHOCTH pa3flHqHbIX MHHHCTepCTB H BezlOMCTB, y,aCTBY1OWHX B 4bOpMHpOBaHKH, UHHaHCHpOBaHHH H peai3aumi couWajibHbIX nporpaMM B xo,ze LumpoKoMacLnTa6Horo BbIcBo6oxIeHHSI pa6oTHHYoB. rlpaBHTe.jbCTBO CV.HTaeT, 4TO HaH6o0ee ryMaHHbIM H 3IOHOMH'qeCK4 34xeKTHBHbIM cnoco6oM coxpalueHMA 14CJIeHHOCTH 3aH5TbIX B oTpaCJIH ABJIAeTC31 orpaHH,qeHHe HaMma, B oco6eHHocTH JIUU, He HMimeowUx Onb!Ta pa6OTbl B yrOJIbHOvi nIpoMbIwlJIeHHocTH. lIpHu npeRzoCTaBJIeHHH CpeCaCTB rocyZIapCTBeHHOK noxiep>KXc1 cJieziyeT npezrycmaTpHBaTb, 4TO npeTeHWZyioume Ha Hee y6bITo'iHbie npenripHSTHR YrOJIbHO9 npOMbILIJIeHHOCTHi Z[OJDIKHbI o6eCrie4HBaTb OrpaHHieHme iHjila flpHHATbIX Ha pa6oTy B TeteHi4e mo6oro xBapTaJia ,ao YPOBHA He 6oJIee 1% OT o6weui *lHCJieHHOCTH 3aHATbIx. 3To YCJIOBHe 6yaeT OrOBOpeHO B corJIaLIeHHAX, 3aKmjo'iaeMbIx Mew.Ay MHHHCTepcTBOM TOnrLIHBa H 3HepreTHR1C POCCHuCKOil (eze,epaumH H rOJIOBHbIMH rioHyIaTeJIAMH cpeiCTB rocyaapcTBeHHO9 nozzep)KK, a Taixwe MeC)ay rOJIOBHbIMH H KOHeYHbIMH rioiTymaTeIiMAH. BceM pa6oTHHKaM LuaXT, o6bABJIeHHbIX X pecHpyKTypJpoBaHlO H JIHKBYHzIauHH, 6yqyT oKa3blBaTbcs 6ecnruaTHble KOHCYJI6TaLIHOHHble yCJIyrH. 3TH yciiyrH 6yaryT opraHH3OBaHbI cIeXepajibHoH cJiy)K6OA 3aHSTOCTH Ha OCHOBe COOTBeTCTByIoLUHx aOrOBOPOB C YrOJIbHbTMM ripeanpHSTH5MH C HCnOJib3oBaHmeM Cpe,aCTB rocyzapCTBeHHo rioep)KKH YrOJbHOl npOMbiiJIieHHOCTH. Pa6OTHHKaM yFO,IbHbIX ipeznpHAHTHl4 6yxryT oKe no Boripocam COUHzaIbHOU 3aWHTbl BbICBo6o)XIaeMbiX luaXTepOB. B w4oHe 1996 roza 6yztyT onpeuenIeHbi nopqaoK H U OpMbl y4aCTHA opraHoB rOCyXaapCTBeHHOA cJIy)K6bl 3aHAToCTH HaceJITeHH B nporpaMMax COLIH&aIbHO- 3KoHoMHlecKoro pa3BHTH5A yrJIeno6blBaboLuMx perHoHoB. K KOHUY HIOfX 1996 roga MeCTHbIMH cIy)K6aMH 3aHATOCTm 6yzryT pa3pa6oTaHbl H npeZiCTaBWieHbI B perUOHa OTbeTleIeHHA Me>KBe,IoMCTBeHHOiI KOMUCCUH nJIaHbl MepOnpH2THH 3THX cnyxK6 Ha LuaXTax, HaMe'eHHbIX K IHXBMqaLMUH ijim pecTpYKTYp43auLIH B 1996 r. H 1997 r., H cMeTbl 3aTpaT Ha peajiH3aumLo 3THX niiaHoB. Pean43auMs yh a3aHHbIX MepOnIPHS4TH HayHeTCIC K KOHLyc CeHTA6pS 1996 roxra. Bo BTOpOM noJiyroimu 1996 roxia HaHHeTcA npaKT14-IecKa3 pean43aUMA nATH nl4JIOTHb[X IlporpaMM MeCTHOrO pa3BMTHI H o6ecneqeHHA 3aHSlTocTH B LuaXTepCKHX 6acceriHax, B HaH6oibTHeg CTerieHH 3aTpOHYTblX pecCTpyKTyp3aLi4ei4 (FleMopcKoM H l1O0IMOCKOBHOM YrOJIbHbTX 6acceRHax, IKy36acce, BOCTO4HOM ;JoH6acce H KH3eJIOBCKOM 6acceiHe). 14CTOlqHHKaMH 4JHHaHCHpOBaHHA yKa3aHHbiX nporpaMM CTaHyT Cpez;CTBa, BbizteJIeHHbIe Ha COUHJarbHYIO 3aIUMTy B paMKaX rocy'aapCTBeHHOKr no=ep)Kxi YFOJIbHOHi HpoMbIluJIeHHocTH, a TaKoKe pecypCbl MeCTHbIX 4)OHaOB 3aHATOCTH. FOJIOBHbIMH noJIymaTe4TAMH 6ioxKeTHbIX CpeaCTB, H anpaBJIleMbIX Ha peaJIH3aumio 3THX npOrpaMM, 6yUyT aRzmMHHCTpauLU cy6'beKTOB ctegepauHH, Ha TeppHTOP14H KOTOpblX paCnOJIo)KeHbl yKa3aHHbie Bbiule yrJiexo6bIBaioLUQe perHOHbE. B Ka,4eCTBe KOHe4HbIX noiryqaTeiiek 6yzxyT BbICTynaTb opraH43aLIH, yHlOJIHOMO4eHHb1e Ha TO MeCTHbIMH opraHamM BTIaCTH. OpraHbl rOCyZapCTBeHHOH CJTy>K6bI 3aHSTOCTH HaCeJieHmq npU4MYT y!.aCTHe B pa3pa6oTxe H peajIM3auH yxa3aHHbIX nporpaMM MeCTHoro pa3BsTMA M o6ecne,eHHA 3aHATocTM, a TaK)Ke o6ecnelaT CO4)HHaHCIIpOBaHHe 3THX nporpamm H3 CpeXaCTB MeCTHbIX #OHIOB 3aHATOCTM. Bo BTOpOU rIOYIOBHHe 1996 ro,qa Ha rWTb rTMJIOTHbIX nporpamm MeCTHOrO pa3B4THq H o6ecneY4eHHM 3aHATOCTM 6yaeT BbiuejieHO B COBOKXYIHOCTH He meHee 200 MmmmapaOB py6nieg. 3TU cpezrCTBa nocJIy)*aTxiA nozulepfcKH Uejjoro pqwza npOeKTOB, a HMeHHO: (a) peMOHTa o6beKTOB COLlHaJIbHOH H npH4po,TooxpaHHO9 uHHpaCTpyKTypbi nyTem opraHM3auHH o6iuecTBeHHbIx pa6OT; (6) no=epcKcH maJIoro 6H3Heca; (B) nepeo6y4eHl4A; (r) KOHCyJIbTHpOBaHH4 no BoripocaM TpyZIOYCTpORCTBa H COae9CTBMq rpyOyCTpOHCTBy; (a) npOT-HX HHUHUaTHB no CO3,JaHHIO HOBbIX pa6oMHx MeCT Ha nepcneKTHBHblx npeznpMATMAx. FI4IoTHbie nporpamMbi BOVtaT COCTaBHOH HaCTbIO B perlOHa-ibHble nporpammbl 12. Annex I -38- Page 14 jfOVipyxTypM3aumi yrOJIbHOH npOMbIwnieHHoCTM, npuHHmaeMbie MeXKBegOMCTBeHHOrI KOMHCCieH. Oco6oe BHMmaHHe 6yreT yZeJieHO LuaXTepCKHM ropozam H nocenxaM, rae yrOJIbHbie npeunpHATH5A ABJSUOTCS rpaaoo6pa3yioLuHMH, H rRe nocieZCTBHsA pecTpyKTYpH3auHH oKa3blBaloT cepbe3Hoe BJIHHme Ha BCeX )KHTeJei, a He TOJTbKO Ha Tex, KTO HenOCpeUCTBeHHO CBS3aH C YrOJIbHOH npoMbIlujieHHOCTbIO. HapsAZy c npOqHMHM MeponpHATHS4MH, KOTOpbie nOjiyqaT noaaepXCXy B paMKaX yxa3aHHbTX nlpOrpaMM, C03,aaeTCA ueiieBOA OHq "BopKyTa-LjeHrp", OCHOBHbIMH 3a,aaam KOTOpOrO ABhIAIOTCA HHc1opMauHOHHaS H KOHCYJIbTaUHOHHa5i noriijepwKKa OTAenbHbIx rpaxmaH H ceMeu, >KeJIaioLlUHX BbEeXaTb H63 paOHOB KpaiiHero CeBepa B zqpyr4e perHoHbI POCCMH. (I)OH, 6yzieT XOOPaHHHPOBaTb CBOIO .aeATeJTbHOCTb C 3aHHTepeCOBaHHbIMH MUHHCTePCTBaMH H BeaOMCTBaMH (DC3 POCCHH, OMC PoccHU, (DOHAOM cowAajibHorO CT)aXOBaHUA H zpyrHMm) no Co3J,aHmio euIHHo0 CHCTeMbi co,aIerCTBHA noHuBM)KHOCT4 pa6oqeg CHJIJI Ha OCHOBe o6MeHa HH4)opMauHeR H opraHH3auuoHHoro B3aHMO,[eUCTBII C perHoHaMH nOTeHLuHajibHoro nepeceneHHs. Ha OCHOBaHHH OrIbITa, rIpHo6peTeHHorO B xoge ocyLueCTBjieHHS nHJIOTHbIX riporpaMM, lpaBHTejibcTBo pa3pa6oTaeT 6o.iee KpynHoMacWuTa6Hbie llporpammbi meCTHoro pa3BMTMA H o6ecrieleHHS 3aHSTOCTH zvA xaworo yrojibHoro 6acceuiHa )IL mx peajiH3aLHH B 1997 roay. 4.2. HIo=epKca COUUHaAEbHOR HHcjpaCTpyKTypbE HlpaBHTeJIbCTBO B CBOeU nOJIHTHKe HCXOaHT H3 TOrO, LITO PeCTPYKTYPH3aLHSA yrOJIbHOU npOMbilwieHHOCTH He 90JI)CHa CHU3UTb o6beM HUH YXYaZUHTb KaYeCTBO COLuaJIbHbIX ycJIyr, npeZaOCTaBAeMbIX HaceJIeHrnO LuaXTepcKHx ropOOB H4 u nOCeJmOB. B xogre pecTpyKTypH3aUHH cpeaLcTBa, BbiXeCjieMbi Ha rocy)lapCTBeHHyio nomzepIKfy yrOJIbHOil npoMbIwJIeHHOCTH, 6yxiyT HCnOJIb3OBaTbCS JUN 4HHaHCHpOBaHHA cJIie1y2ouHx MeponpHSTH9: 3aBepLueHHe nepeua'14 B BegeHXie MeCTHbix opraHoB Bj1aCTH o6,beKTOB COUHaJbHOH c#epbi H )KHJIHLLAHoro 4OHga, HaXOamLWHXCq Ha 6aAaHce yrOjibHbiX npe,rnplsATMr4; o6ecneqeHHe aOCTaTOqHoro UHHaHCHpOBaHHSI VIA 3xcnjyaTauHu H TeXHHqeCKOrO o6CJIy>KHBaHHs o6seKTOB COUHaHJbHOFo cbepbi, nepexraHHbIX B BeZeHHe MeCTHbIX OpraHOB BJIaCT4; CHOC Hun peMOHT BeTXoro KHJIbA. AiDm o6ecneqeHHs Heo6XoJWMoro IHHaHCHPOBaHHS o6'beRTOB COuLaJbHO R c4epbI B TemeHme BTOporo noJiyroaHA 1996 roxaa IIpaBuTeJIbCTBO POCCUUCKOU (Ze,aepaLuH Bb1JejiHT 1,6 TprnuIJIoHa py6niie MeCTHblM opraHaM BnacTH XIs cMHaHmCpoBaHHA pa3BHTHA, 3aMeHbl B cjiyMae Bbi6blTHS, 3K1crIyaTaumm, 13. Annex I -39- Page 15 t*AHqecioro O6CJJ)KHBaHHSA H peMOHTa o61eXToB coLUIaIbHOR C4lepbi B yrOjTbHbiX 6acceiiHax. 3TH CpeuCTBa MOryT HCnOJIb3oBaTbCq X-UIA 4HHaHCZpOBaHt5A BbilnjiaTbl 3apa6OTHoA rnIaTbl pa6oTHHKaM Co0ULajIbHOU c4epbl, peMOHTa KOMMyHaJIbHbIX ceTeH, nOVJOTOBK4 o6IbeKTOB COULaZbHOH c41epbl K 3HMe, B03MeLLeHHS 3a,oxE0KeHHOCTm no KOMMYHaJIbHb[M ycJryraM, peMOHTa o6ibeKToB 3AaBooxpaHeHuA H o6pa3oBaHls4, a TaK)Ke 3aKynOK TonJIHBa. B aBrycTe 1996 roARa MeKBBeaoMcTBeHHaSA KOMHCCHA paccMoTPHT OTqeT 0 xo,Re nepe,aaYu o6-be](TOB COLkH&UbHO4 4HHpaCTpyKTypbI waXT MeCTHbIM opraHaM BJIaCTH, XOTOpbIU 6yAeT nOVJOTOB3ieH KOMnaHHer "Pocyrojib" z aamMHHHCTPaULIUMH cy6-beKToB cIeaepauHH, Ha TeppHTOPHH XOTOPbIX pacnOJIO)KeHbl yrjieao6blBa1owLHe perHoHbl. 5. JIHKBHaaUHR y6blTOMHbIX H HehnepnCeKTHBHbIX waXT H pa3pe3OB B 1994 rozry rlpaBHTeJIbCTBO HatIaJIo ocyLLeCTBJSITb MepbI no JIHKBi4XuaLlH y6blTOqHbIX H HenepCnIeKTHBHb1X waXT H pa3pe3OB B pamiax nporpaMMbl no peCrpyKTypH3aumH oTpacsiz. B 1994-1995 roaax npexpaweHa Ao6fti4a yrA Ha 37 LuaxTax. YTBepAezieH rpa#ix nOarOTOBXK npe=o>IoeHHHH 0 3i4xBHaauHH YrOjTHbJX npe,anpHATHu H Zqpyroi0 Heo6xoiHMog npoeRTHoiu goxcyMeHTaLum1 no JIHRXBHZEUHH 95 y66lToqHbX uI HenepcneTHBHbIX waxT. Pa3pa6oTaHbE H yTBepxA)eHbl TexHHKo- 3KOHOMHyeCKze o6ocHoBaHMs JIHKBHXaauH4 no 40 wLaxTaM. TexHHKo-3xoHoMH4ecKHe o6ocHoBaHZA JiyKBcmaau[ i OCTaTibHbIX 55 aiLaXT HaXOURTCR Ha pa3JIH'HbIX CTaqZAX pa3pa6oTKH, T.e. corflaCOBaHHl4 c MeCTHbIMH opraHaml BJIaCTH, npO4bCOIo3aMH, H opraHaMH rOCyrapCTBeHHOA 3KCnepTH3bl. B 1996 roUy B IeqOpCKOM yrOflbHoM 6acceuiHe 6bJIa 3aBepweHa pa6oTa no JIHBZtaiUH LUaXTbl "XaJIbMep-1O" c co6mogeHmeM BCeX Heo6xoazMbIX HH>KeHepHO- TeXHHm'eCxHX H COUIa.JIbHO-3KoHOMzMeCKHX Tpe6OBaH4H. B HacToALuee BpeMA Ha 64 waxTax BeCIYTC3 TexHHmecKHe pa6oTbl no HX JInKBHXaUiHm, BKJflOHasA norauieHue Bblpa6oTOK, ,eMOHTa)K o6opyaoBaHMA H COOpyKeHHri Ha nOBepXHOCTH waXT, npH,qeM Ha 34 H3 HUX 3TU pa6oTbi 6y)y'T 3aBepLeHbl B 1996-1997 roqax. 3a c'eT JIHKBHZIUaHH y6blTOHHbrX LHaXT H pa3pe30B B 1996 roxy 6yaeT BbICBo6o)KnaeHo 22-24 TbICA'1HqefOBeX. PoccH4icKoe 3aKOHo0aTeJIbCTBO onpe,lejAeT o6auw4 nOpAaOK JIHKBiiaaU"m nlpe,aripfAT14 pa3JU4qHOH opraHH3aL4OHHO-npaBOBOH 4OpMbl. YtqHTbIBaS oco6eHHOCTH yrOJIbHO9 npOMbILuineHHOCTi, MeKBeaoMCTBeHHas KOM1ICCHA B 14. Annex I -40- Page 16 e*pa.ie 1996 roga oao6pH3ia "OCHiOBHble nlpHHUHnlbl JIHKBUaUHH HeriepCrieKTHBHbIX H oco6o y6blTO4HbIX waXT H pa3pe3OB , B KOTOpblX o6wUiA nOp51JJOK J1HKBHXaUHH npeunpHATHM KOHKpeTH311pOBaH IlpHMeHHTeJIbHO K luaXTaM 1 pa3pe3aM. Yxa3aHHbIi nfOpSlZLOK onpeaejmeT aOnOJIHMTeJibHbie Mepbi no o6ecne'ieeH-0o uejieBoro MCnOJIb3oBaHmS 61oEn*eTHblX cpeqCTB, BblaejiAeMbIX Ha JYHKBHZaUmio waXT H pa3pe3oB, rapaHTHH 3aHSTOCTH H COuHajibHOf4 3aLUHTbl BbICBo6o>w,aeMbIX wLaXTepOB H nOBbILIeHHsI pOj1H MeCTHbIX opraHOB B3iaCTH B peaJH3avUHH nporpaMM COLU1aJIbHO-3KOHOMHUeCKOrO pa3BHTHS yrneao6blBaboaLHx perHOHOB. B HIOHe 1996 roja oKOHqaTeJTbHbli BapHaHT "OCHOBHbIX nprtHUHfnOB JIHKBH,aLauH HenepcrieKTHBHbIX H oco6o y6blToHHb[x LuaxT H pa3pe3OBs 6yaeT HarIpaBJIeH Ha YTBepx)CZeHme B Me)KBeaLloMCTBeHHy10 KOMHCCHIO. 3To o6ecnemHT B03MO)KHOCTb 6oJIee o6-bexTHBHoro OT6opa wlaxT H pa3pe3OB, nozuiecaLUHx JIHRBH,Z1a,HH, YCHJIeHHA npaBOBOl OCHOBbI HX JITK aBHRaUHm, BBe,ueHHMi nrIaHa- rpactHKa 6IouxeTHoro #HHaHCHpOBaHMA pa6oT no JIHKBH,AaUHIH, HCKJMOCeHHS B03MO)KHOCTH npHHATMS pelleHHiH 0 JIHKBH,(aUHH waXT 6e3 o6ecne'-eHHA Heo6xo.Moro cMHHaHCHpOBaHHS H oCyiueCTBIeHHS npe,JIyCMOTpeHHbIX 3aKoHo,laTeJIbCTBoM mep couIHajibHOi 3alUjHTbl TpYJIUJHXCS, BbICBo6o)fgaeMbIx B CBA3H c pecTpyKTypH3auj4eiA, EJ1eHOB HX cemeri, a TaKxce pai-ee pa6oTaBulHx B yroJmbHoE npOMbmIiieHHOCTH neHCHOHepOB 1 MHBaJIMZOB, HCKmOqeHHS B03MO)KHOCTH nHXBHmaauHH XOTS 6bl O)JHOH uaXTbI HJIH pa3pe3a 6e3 npegBapHTenbHOrO npe2IoCTaBJIeHHA coOTBeTCTByioWeg 3aLW4Tbl Bbl CBo60ow,aeMblM p a6oTHHXaM. B Mae-HIoHe 1996 roaa MeCKBeZaOMCTBeHHaA KOMHCCHM pacCMOTpHT, YTBepglHT H LOBe,,IeT flO CBegeHH5A BceX 3aHTepeCOBaHHbIX opraH3aULH njiaH-rpaJHK 6IozKeTHoro 43HHaHCHpOBaHHS MepOnpHATHi no JIHKI4B LauHH mLaxT H pa3pe3OB Ha BTOpoe nojiyroizre 1996 rozaa. rlipH 3TOM npHMepHo 70% CpeaCTB 6yzeT HanpaBJieHO Ha COLIMaJbHYO 3aLUHTY BbICBo6o,KLaeMbLix pa6oTHH]coB, a pIH6JIH3HTeJIbHo 30% - Ha BbInOJIHeHHe HH)KeHepHO-TeXHH4eCKHX MepOnpUlIHTiU. YKa3aHHblHi niiaH-rpau4K nO3BOJIHT 3aBeplUHTb B 1996 rorry TeXHHMeCKlHe pa6oTbl no JIHKBHIau4UH He MeHee 20 waxT. B Hos6pe-AeKa6pe 1996 rorra B pamxax 4opMMpOBaHllJ npoeKTa pacnpeaeJneHMA 6io,uKeTHbIX cpeaCTB Ha 1997 ron Me)KBeaoMCTBeHHaA xOMHCCcH YTBepZMT npoeKT nJiaHa-rpa4Hxa 6ioa0KeTHoro cIiHaHcHpoBaHHs MepOnpHsTIAH no hIHKBHzaLlUl4 [uaXT H pa3pe3OB Ha 1997 ro,. - 15. Annex I -41- Page 17 of 34 6. HHBeCTHIUHH I1OJIHTHKa flpaBHTeJIbCTBa 3aK.-InOqaeTC3 B TOM, qTO6bi npUICTynHTb K nepexory Ha xOMMepqeCK4e npfHLHuinbi 4)HHaHCHpOBaHHR HHBecTHUHii B yrOlbHyIO npoMblwneHHoCTb. B Mae-HIoHe 1996 roTia MeCKBeaoMcTBeHHOA KoMHccieCe npH paCCMOTpeHUH nnaHoB-rpa4HKuoB pacnpeaejieHl4i roCyaapCTBeHHog noDzep>KXH Ha BTOpoe noiryroza4e 1996 rora 6ygeT 'rPUHATO peuleHHe 0 TOM, qTO 43HHaHCHPOBaHme KanHTaJIbHOrO CTpOHTeJIbCTBa B yrOJIbHOU npOMbIluJIeHHOCTH 3a CqeT cpeaCTB rocyzIapCTBeHHoi nOAaep)KKH BO BTOPOM noJIyroaHm 1996 roma 6yqeT OCyLueCTBJIAeTCq Ha 6e3Bo3BpaTHo9 OCHOBe TOJTbKO no o6fexTaM, Ha4aThIM CWpOHTe;jbCTBOM paHee I AHBapq 1996 roxia. BceM npyri4M npOeYTaM Kan]HTaj1OBJ1o)KeHHil B YrOJlbHYIO OTpaCJTb rOCyaapCTBeHHaA no=epwxa 6ygeT npe,fOCTaBJISTbCA TOJJbKO Ha BO3BpaTHOH OCHOBe no nOIO>KH4TeJlbHOHi peaJ1bHoH4 CTaBKe rpoueLHTa H TOJTbKO no, xOMMepqeCxH riepCneKTHBHble HHBeCTHUHOHHbie npOeKTbl. B 1997 rozay IpaBHTejIbCTBO 3aBepLUHT nepexo, K BbLieIeHllO HHBeCTHUMOHHbIX pecypcoB U3 Cpe.RCTB rOCyaapCTBeHHOR no=epXKRH YrOJIbHOU npOMbliuJIeHHOCTH Ha niiaTHoH, B03BpaTHOR H KOHKypCHOA OCHOBe. AJIA 43HaHCHpOBaHKA CTpOHTenjbCTBa H pa3BHTHS HOBbIX BbICOKopeHTa6eJIbHbIX LlaXT U pa3pe3OB 6y;XyT npHBJIeKaTbCq KcpeaHTHbie Cpe[CTBa noz0 npaBHTeJbCTBeHHble rapaHTHH. B HoA6pe 1996 roga Me)KBeZIoMCTBeHHaSi XOMHCCHA opraHH3yeT npoBeqeHme xoHxypca HHBeCTHLUOHHbIX npOeKTOB H no ero pe3ynbTaTam npHMeT peineHHe o pacnpe,1eneHHH Cpe1CTB rOcyaapcTBeHHori noUep)KRH yrO.IbHor0 npOMbIlujieHHOCT4, Bbi,1ejiAeMbiX Ha HHBeCTHUL4H B 1997 rogxy. 7. KoMMepualanH3aLuHs H AeMoHono0JH3aUHfl rIpUHHHnbl H nyTH pe4OpMHpOBaHHA CHCTeMbl ynpaBiieHAs yrOJIbHOUi rpOMbiUJfleHHOCTbIO onpeaeeneHbl B "OCHOBHblX HanpaBjIeHHAX PeCTPYKTYPW3aUUU4 yroJIbHO9 npoMbIELUJeHHocTH". Ba)KHerlwee 3Ha'eHHe WTiA Hx peaTIH3aUuH HMeeT YKca3 HTpe3HZLeHTa PoccHicxoui (CegepauiH OT 9 43eBpans 1996 r. Ng 168 "O mepax no XLaJTbHegiueMy COBepLueHCTBOBaHHIO CTPYKTypbl yrOJIbHOr4 I1pOMblUJIZeHHOCTh PoccUiUcxoU (DeaepauHm". Bo HcnoJIHeHHe 3TOrO yxa3a X KOHUY HIOHS 1996 roaa EIpaBHTeJnbCTBo npeo6pa3yeT rocyaapcTBeHHoe npegnpHATuie "PocyronI" B OTKpblToe axUHOHepHoe o6LueCTBO. K KOHUY OKTA6ps 1996 r. rlpaBHTenbcTBo: 16. Annex I -42- Page 18 of 34 *YTBep,IHT HOpMaTHBHble roKyMeHTbl, periiaMeHTHpyIOwme BOllpOCbl XIOBepMTejibHOrO ynpaB.IeHMSi rOCyaapCTBeHHbIMH naxeTaMH aKULMH yrOflbHbEX KoMnaHMH, B TOM qHcjie KacaWolIUieCS Ha3Ha1eHMA HOBbIX XOBePHTeajbHbIX YnPaBJIAIOLWHX H HX 06A3aTeiibCTB nepex 4)eaepajbHbIMI4 opraHaMM BJIacTM; * nepeaacT B YCTaBHbie KanlHTaJIbI 3TMX OTO6paHHbIX YrOJIbHbIX xOMnaHHI4 rOCyZxapCTBeHHbIe naxeTbl aKUIH CBA3aHHbIX C HHMH aKuUiOHepHbIX xoMnaHHA, xax 3TO npeaycMoTpeHO B Yxa3e rIpe3HaeHTa PoccHicxou cIe[epaumH Ng 168 OT 9 4JeBpaAS 1996 roaa; * HanpaBHT nOTeHHLIaHJIbHbIM ymaCTHH1CaM KOHKypca Ha KOHTPaKTbi no ZIOBep4TeJIbHOMY ynpaBJIeHUiO OTo6paHHbIMM xOMnaHHAMH BCIO HHcPopMaUHIO, KOTOpSa MM noTpe6yeTCA Jix nO;IOTOB1H CBOHX npexioweHHM. Ha OCHOBe mcnOJIb3OBaHHA yKa3aHHbIX MexaHM3MoB X XOHUY ,aexa6ps 1996 roga rlpaBHTeJIbCTBO o6ecneMHT, qTO6bl HOBbie OBepHTeCjbHbie ynpaBnAlotije KOHTpoJIMpOBaJII yrOJIbHbie xOMnaHHM, CyMMapHbIH of6em Ao6bl1M KOTOPbIX B 1995 r. COCTaBJI-TI He MeHee 65 MJIH. TOHH yrnA, T.e. npMi6JH431TeJIbHo 25% OT Bcero o6beMa Ao6bugM yrim B POCCHiiCKOXi (DegepauHM. He no3zaHee Tpex MeCSALeB nocJIe XOHXYPCHOrO Bbi6opa XIOBepHTeJIbHbIX ynpaBJHAIoiuMx rocyJtapCTBeHHbIMM naxeTaMm axUHH yxa3aHHbIX Bblule yrOJIbHbIX xOMnaHHR, 41e[epaJibHble opraHbl HCnOiIHHTeJTbHOUi BjiaCTH paCCMOTpIT 6H3Hec- nIiaHbl, npeXICTaBJIeHHbie HOBbIMH XOBepMTeJIbHbIMM ynpaBiA}IOLUHMM. K XOHUY rexa6ps 1996 roxaa Me>KBeaoMCTBeHHaA KOMUCCHA onpexIeJTHT Mepbi no YCKOPeHHIO JaeUeHTPaJIH3aiUH ynpaBJIeHHA B yrOJIbHOH npOMbTlujieHHOCTM Ha 1997 ro, npUMmeHUTeJIbHO K apyrHM geriCTByIOWHM B HaCTOAliee BpeMA yrOflbHbIM KoMnaHMAM H aKUmOHepHb1M o6weCTBaM. 8. COUUHabHOe napTHepCTBO rlOJIHTUKa rlpaBHTeJIbCTBa HCXOaHT U3 TOrO, MTO MeXaHU3Mbl COUHaJIbHOrO napTHepCTBa 31BJIAIOTCS OCHOBOU B3aiMmo0eACTBHA H MHHOpMaLIuOHHOrO o6MeHa y,aCTHHKOB peCTpYXTYPH3auHM yrOJIbHOH HpOMbluiYieHHOCTH. C03,aBasB HOpMaTHBHO-npaBOBbie YCJIOBHA EI KOHCTpYKTHBHOrO B3aHMoreACTB1s4 pa6oToaaTeieie u pa6oTH4xoB B npouecce KOJJe]KTHBHbIX neperoBOpoB, opraHbi HCnOJIHHTeJIbHOUi BJIaCT4 BCeX ypOBHeH He JOYKHbi npUMHHMaTb HenOCpe,aCTBeHHOrO yHaCTHA B pa3pa6oTKe U 3axKjO,IeHMM XOJTJIeKTHBHbIX aOrOBOPOB U corJIaL11eHHA, 'ITO noTpe6yeT M3MeHeHMlH areAcTByioiUe9 Annex I -43- Page 19 o%GVMaTHBHo-npaBOBor4 6a3bl. K KOHUY 1996 roga FIpaBHTeJIbCTBO paccMOTpHT npe=oKweHMA no H3MeHeHHio nopsAxa pa3pa6oTxH H 3axinoqeHMA xojmeRTHBHbJx ,UOrOBOpOB H cormaweHMRn, He rpe6yioWHx ero npqmoro yqaCTHA H 3aKpenJIAfOI4HX caMOCTORTeJIbHOCTb pa6OTOaaTeJIeg u pa6oTHwIIoB HA/JIU Hx npeacTaBHTeIIeii npH 3aKJuO4eHHH KoJueKTHBHbIX XOrOBOPOB U COrrIaweHH4, B TOM mmCie, no YpOBHIO H #Opme oniiaTbl Tpyaa, B 3aBHCHMOCTH OT cHHaHCOBbIX BO3MO)KHOCTeH npealpHASTHH H B paMKaX aeACTByIOLLerO 3aKOHoaaTejIbCTBa. Pa3BHTHe MexaHH3MOB COUHaTbHoro napTHepCTBa pa3JIHtHblx rpynn HacexIeHHAi yrnie[o6biBaioLuHx perHOHOB, qbH HHTepeCbl HenOCpeICTBeHHO 3arpar4Ba}OTCA peCTpyKTypH3aUHer4 yrOJIbHOH OTpaCJIH, 6yXreT OCyliueCTBJIATbCS nyTeM opraHM3auHOHHoro yxpenrieHAs o6pa3oBaHHblX B 1994-1995 rozax perioHHabHbIX Me,KBegOMCTBeHHbIX KOMHCCHrl H C03,aaHHA TaXHX KOMHCCHU B yrjiegO6blBaiOwHX perHoHax, rxte OHM etue He CO3,aaHbl. Ha MeCTHOM YpOBHe 6yzyT CO3aLaBTbCS Ha6JnoxaTeJIbHble COBeTbI, pyYOBO)lHMbie rJTaBaMH aaMHHHcCTpauUi4 LiaXTepCiKUX rOPOXOB H BKMJOFqaIOWU4e rpeaCTaBTeJIeA pa3JIMYqHb1X COUHcMbHbIX rpynn. OCHOBHOri 3aaageg Ha6mo,qaTeYILHbIx COBeTOB 6yqeT onpeqejieHHe cTpaTermH MeCTHOFO pa3BHTHA, KOOPZLHHaUH5I pa3pa6oTKic u OCyiueCTBj1eHHUA riporpamm MeCTHOrO pa3BHTHSA, COumaji46HOR 3aLUiTbl BbICBo6oxczaeMbix Tpy,-LqiuHXCA H )K4TeiieH WaXTepCKHX ropozoB H lnOCenKOB. Ha6juoXaaTeJIbHbie COBeThi 6yxyT onpefelITb OCHOBHbJe HpHHUHrIbi HCnOJI6b3OBaHSA CpeaCTB, BbIleimeMbiX Ha 42HHaHCHPOBaHHe nporpaMM MeCTHOrO pa3BHTHI. B Mae-HIoHe 1996 rowxa B LuaxTepcimx ropo,gax nSTH yrJneao6blBaiou.mx permOHOB 6yxIyT C03,aaHbl MeCTHbIe Ha6.3To0aTe.IbHbie COBeTbl. B Mae-PIuoHe 1996 rojga 6yzyrT opraHH3aui4OHHO ylKpeniieHbi perHOHanbHb6e MeXCBeZJOMCTBeHHble KOMHCCHU no couHaJIbHO-3XOHoMHMqeCKM npo6neMaM yrJie,ao6blBaioLuix perHOHOB, CO3,qaHHbie B POCTOBCKOU H Tyibcyoii o6nIacTTAx. qJL opraHH3aLui4OHHO-TexHHm,ecKoro o6ecne4eHlSl UX aeSTeJIbHOCTM npH aaMM4HHCTpaLUHRX 3TUX o6JIaCTeg 6yayT C03XaHbl CneLUHaJIbHbme pa6o0Me rpynnbl. ,ZI,o I AHIBapS 1997 roAa BO Bcex yrJIeuo6bIBaioUHX perHOHaX 6yqyT C03,aaHbl perHOHaJIbHbie Me)KBeaOMCTBeHHble ROM4CC4H. IptMepHO B 30 waXTepCKHX ropo.zax H noceJIKax 6yayT opraHH3OBaHbI MeCTHbie Ha6mjo,aTeJibHbie COBeTbl. 18. Annmex -44- Page 20 of 34 EByyT C03Z7aHbl YCJIOBg1u JfS o6ecneqeHHs aKTHBHoro H 3auHTepecosaHHoro yqaCTHR LuaXTepOB, 2KHTeXieg maXTepcKHx ropOZ(OB H rYOCeJnCOB B rIpoUecce peCTPYKTypH3aUHH yrOJIbHOH npoMbIwJIeHHOCTH. A,JT 3TOrO npeaycMaTpHBaeTcs: - o6ecnetriBaTb pa6oTHHKOB yrOJIbHbIX nperinpHATrH, XUHTeneg yrnego6blBaioiuix perzHOHOB HHropMaagHek o nporpammax u xo,ae peCTpYKTYPH3aUHH oTpaCIH, copmax COLU4aJIbHO-npaBOBOH 3awHTbi LHaXTepOB H 1UIeHOB HX ceMer; - yKperfJISTb MeCTHbie o6LUeCTBeHHble OPraHH3aUHH B HHTepecax 6onee 3¢4¢eXTHBHOR COU4aJIbHO-ripaBOBOi 3aLUHTbI )KHTeIieg yrneao6blBaioajHx perHOHOB; - OCy1ueCTBJIA5Tb MOHHTOPHHr peCTPYXTYPpH3auHH yrOJIbHOHI npOMblulJIeHHOCTH H HH3OPMHPOBaTb mepe3 cpexLcTBa MaccoBOM HH4)opMaauHH )KHTeIieg yrjiezo6blBalolu.Xx perUOHOB O pe3yJIbTaTaX 3TOrO MOHHTOpHHra. 9. OpraHH3aWLoHHasi norioepKa ;j3iA peaJIM3aLxHH nOJIHTHuH rIpaBHTeJTbCTBa no pecCTpyKTYPH3aUHH yrOJIbHOi npoMbIWfIeHHOCTH Heo6xO,IHMO o6ecne4HTb peuleHHe ciie,yioiuHx BcnoMoraTeJbHbIx 3a,aaq MeC)KBeaOMCTBeHHoro xapaXTepa: - yxpeinieHHe opraHH3aUHoHHo-TexHHiecKoro H HH4oppMaUHOHHO- aHaJMTUYlqecxoro o6ecneqeHsA eSeTeJbHOCTH MeKBeaOMCTBeHHOr4 XOMHCCUH; - MOHHTOPHHr fYHXUHOHHpOBaHHA MeXaHH3Ma rocyqapCTBeHHoro 4 HHaHCHpOBaHHA peCTpyxTypH3auHH yrOJIbHOri rpOMbliUiJeHHOCTH H Bblpa6oTKa mep no ero CoBeplIweHCTBoBaHHIO; - opraHH3auHS He3aBHCHMblX ayaHTOPCKHX npOBepoK IOPHuz4t4eCKHX JIHU - nojiyMaTeiieri CpeaCTB rOCyzXapCTBeHHOU no=ep)KcH; - opraHH3aUHS KoMnHIeKCHOrO MOHHTOpHHra CO1HaJbHO-3KOHOMw1eCKOoA CHTyaUHH B yrJieao6blBaioLumx perHOHax, HHc¢OpMHpOBaHHe o6meCTBeHHOCTH, pa6oTHHKOB yrOJIbHOUi npOMbiwIJIeHHOCTH H )KHTeJIeH yrneao6blBaioJuix perHOHOB o xo,ae pecTpyXTypH3avuu oTpacJIH. 19. Annex -45- Page 21 of 34 C ueimio pelweHHJ yxa3aHHbIX 3agag B Mae-HOHe 1996 roxra 6yxaeT o6pa3oBaH CneU1ia3IbHbliU mOH,4, geriCTByIOUIH B COOTBeTCTBHH C 3aCOHOM 0 HeKOMMepiecCKUX opraHH3amUHX H rpaxaaHCKHM KoXCeKcoM POCCHUiCKOri cIeaepawuH. (DOHZ 6yaeT aZCKBaTHO cHHaHCHpOBaTbCS, B TOM YHcUie U3 CpeXeCTB TeXHH'eCKOrO COaeUiCTBHS. O4HUHajmHbilU nepeBoa nHCbMa Ha aHrim4CKHUi SA3bilK npHiaraecSi. Yipe,ace,xaTem YipaBHTeJIbCTBa PoccUUiccoU (CexIepaLUHH B.MqepHOMblpxniH 20 Masi 1996 roxga Annex)I -46- Page 22 of 34 Annex I -47- Page 23 of 34 OdIIUHaAbHbWi riepeBOn LETTER ON COAL SECTOR POLICY The Russiani Government has prepared and started to implement a set of measures aimed at transforming production and organizational structures of the coal industry to improve coal industry efficiency and to resolve social and economic problems of the coal regions. In the framework of these measures, it is stipulated that the structure of allocation of budget funds will be shifted from financing coal production to restructuring measures, including closing unprofitable and non-viable deep and surface mines, social protection of laid-off workers, and the creation of profitable coal production based on viable and sustainable coal enterprises. A new mechanism for the allocation state support will be introduced which will ensure transparency and government control. Measures to enhance the organizational structure of the coal industry include the demonopolization of management and creation of a competitive environment in the coal sector. Coal restructuring actually commenced in 1993. State support to the industry has been considerably reduced: from: 1.04%o GDP in 1993 to 0.45% GDP in 1995. The share of federal budget funds as a proportion of coal industry financing has been reduced from 77% in 1993 to 31%o in 1995. 37 loss-making mines have stopped production. The number of coal sector employees was reduced from 626,000 in 1993 to 529,000 in 1995. Approximately 73% of social assets in mining communities have been transferred from coal associations to municipalities. Annual coal production decreased from 305.5 million tons in 1993 to 270 million tons in 1994 and to 263.3 million tons in 1995. Unlike coal industry restructuring programs in other countries where production capacity was reduced by up to 80-90%o, after restructuring the Russian coal industry will remain one of the largest in the world, and will become competitive both domestically and internationally. 2. Coal Restructuring Strategy 2.1. Long Term Strategy. In 1993, an Inter-Agency Commission for Socio-Economic Problems of Coal-Producing Regions (the Coal Commission) was created; its members were approved by the decision of the Russian Government. The Head of the Coal Commission is the Russian Deputy Prime Minister. The Commission includes Heads of Ministnrs and Agencies directly involved in coal sector restructuring, Heads of Regional A^Wridministrations of the key coal-producing regions, union leaders, and managers of coal enterprises. On July 14, 1995, the Head of the Coal Commission approved "Basic Trends for Coal Restructuring" which reflected the main elements of the Government's long term strategy: 2. AnnexI -48- Page 2'iyf 34 Budget fund allocation to cover operatinig losses. The gradual phasing-out of state support to the coal industry is an essential part of Russia's program of macro- economic stabilization and its strategy to create a profitable market-oriented coal sector. The Government is reducing the total volume of budget finds allocated to selective support for mines which can not cover their losses from liberalized prices for coal (subsidies for operating losses). (ii) Investment. Modernization, rehabilitation and expansion will rely on internal financing by coal companies, loans, and private domestic and foreign investment. State support funds allocated for this category will facilitate the development of investment activities. (iii) Closing loss-making and non-viable coal enterprises, divestiture of non-core enterprises. At least 90 loss-making deep and surface mines (overall capacity 60 million tons/year, with a total workforce of 83,000 people) will be closed. As non- core production activities are divested, further reduction of the workforce by 175,000 workers will take place. (iv) Social Sphere. Cushioning the negative social impacts of restructuring will be accomplished by a set of measures to support employment in parallel with programs to create new jobs without subsidy, with benefits and compensations to workers made redundant due to restructuring, their families, pensioners who used to work in the coal industry, disabled people and families of deceased miners. The transfer of social assets to municipalities will also be completed. In the longer term, the social infrastructure management system and ownership will be reformed. (v) Environmental Protection. The Government is committed to mitigating any adverse environmental effects caused by the closure of mines. The relevant environmental authorities are involved in the preparation of technical plans for mine closures and monitor compliance with the environmental requirements of the approved plans. A study will be carried out to examine priorities and options for addressing the environmental problems caused by past mining activities and to recommend an institutional and financial framework for the rehabilitation of lands disturbed by mining. (vi) Transformation of Management System, Commercialization and Demonopolization. The Government is taking steps toward the demonopolization of the management of the industry and promotion of conditions to create profitable coal companies and competition in the coal sector. Privatization will reduce the federal share in ownership of the industry and result in a the coal industry consisting of a number of independent, competing self-financed companies. Rosugol will be transformed into a joint stock company whose goals reflect the goals will of coal sector restnictuting. 2.2. Medium Term Goals. In accordance with the "Basic Trends" documenit, the Government has identified and commenced implementation of a series of mediull term measures. 3. Annex I -49.- Page 25 of 34 On February 9, 1996, the President of Russia signed Decree No. 168 "On Measures to Enhance the Russian Coal Industry Structure" which empowers the Government to strengthen regional coal companies and to assign trust management of the State's shareholding in these companies to various trust agents, and to transform Rosugol into a joint stock company with 100% shares in federal ownership for 3 years. In February 1996, the Coal Commission considered and adopted Programs of Social and Economic Development for a number of coal regions of Russia (Pechora, Moscow, Kuzbass), and adopted a draft program for Eastern Donbass and presented recommendations on completing similar programs in other coal regions in 1996. 2.3. Short Term Set of Measures. For the first time in the history of State support to the coal industry, the Coal Commission adopted a schedule for the allocation of State support for the 1st half of 1996 by recipient and category. A similar schedule was considered by Coal Commission on May 20, 1996. On February 26, 1996, the Coal Commission approved and the Government adopted a Resolution No. 598 of 17 May 1996 on "State Financing of Coal Restructuring" which identifies the allocation of subsidies by recipient and category. The above-mentioned decisions are important steps toward creating transparency of State support use and enhancement of public and government control of the use of funds. 3. Amount, Structure, and Mechanisms of State Support to the Coal Industry 3.1. Level of State Support. The 1996 federal budget provides for state support to the coal sector totaling 7.4 trillion rubles. Subsequently, the Government made a decision to increase the amount of support provided to the sector by 3.0 trillion rubles, bringing the total expenditure to 10.4 trillion rubles. In order to avoid an inflationary impact from this unplanned increase, we intend to finance the additional expenditure by borrowing from abroad. However, the total expenditure of 10.4 trillion rubles would represent a 9% reduction in real terms compared to 1995. The categories of state support for the coal industry in 1996, are A. State support for coal restructuring; B. Temporary state support for coal production; and C. Support to transferred social assets. The details of these subsidy categories are given below. 4. Annex I -50- Page 2W Ategories of state support for the coal industry in 1997 will be the same as in 1996, except that support to transferred social assets will be excluded (any such support to be funded through general transfers to subjects of the Russian Federation). 3.2. Allocation of State Support. Within the total state support provided to the sector in 1996, we intend to change the structure of state support allocation in order to increase the share of categories allocated to coal sector restructuring and for the maintenance and operation of social assets in coal regions. In accordance with the classifications in "State Financing of Coal Restructuring", the broad category (A) 'State support for coal restructuring' covers: (1) physical closure of loss-making and non-viable mines; (2) 'social protection expenditures', focused on redundant workers and their families, as well as pensioners retired from the coal industry and disabled former employees (this sub-category will include Community Support and Employment Programs--see section 4.1); (3) compensation to workers at closed mines who are disable or suffer from occupational diseases; (4) demolition of dilapidated housing, and construction of new housing in mining communities; (5) investment in renovating and improving existing mines in order to make them profitable; (6) investment in the construction of new profitable mines; (7) research and design consultancy; (8) contributions to the Central Reserve Fund to cover the costs of coping with accidents, disasters and similar events. The broad category (B) 'Temporary state support for coal production' includes: (9) selective support to mines which are unable to cover operating costs with revenues received from coal market prices (subsidies for operating losses); (10) expenditures of coal enterprises and mine construction organizations to cover industry Tariff Agreements; (11) support for social assets which have not been transferred to municipalities. Annex I -51- Page 27 of 34 In addition, for the second half of 1996, a new category will be introduced to cover (C) 'Support for transferred social assets', covering payments to local governments for the operation, maintenance and improvement of social assets transferred to local authorities. In May 1996, the Coal Commission will adopt a schedule for the allocation of State support in the second half of 1996. The Schedule for state support to the coal industry in the second half of 1996 will include allocations of: (i) not less than 1.6 trillion rubles for transfers to subjects of the Federation to finance their expenditures on the development, replacement, rehabilitation, maintenance and operation of social assets already divested from the coal industry to local governments; (ii) not less than 200 billion rubles in total for transfers to Kemerovo Oblast, the Komi Republic, Rostov Oblast, Perm Oblast and Tula Oblast to finance their expenditures on pilot Community Support and Employment Programs for coal communities in these regions; and (iii) not less than 300 billion rubles to coal companies to finance their expenditures on social protection for mine workers, former mine workers and their dependants. The draft federal budget for 1997 for the allocation of State Support for the Coal Industry (to exclude financing for already transferred social assets) will incorporate the following provisions: (i) not less than one-third of total state support for the coal industry will be allocated to physical costs of mine closures, social protection including Community Support and Employment Programs, and disability compensation for disabled workers at closed mines; and (ii) total state support for the coal industry, excluding the items listed in (i) above and excluding loans to coal companies at positive real interest rates, will decline by at least 40%o in real terms in 1997 relative to 1996. Adequate provision will be made in the 1997 draft Federal Budget for transfers to subjects of the Russian Federation for support for divested social assets, taking into account the pace of transfer of such assets, increased cost sharing by local authorities and beneficiaries, and the need for similar treatment for all divested social assets. 3.3. Mechanism of State Support. In considering the allocation of State support, the Coal Commission will identify the list of primary recipients which, in addition to Rosugol and Rostopprom, will include independent coal companies (when formed), and regional and local authorities in coal regions (for social support). After a proposed allocation of coal subsidies (by category/sub-category and recipient) has been reviewed and approved by the Coal Commission, agreements will be signed between the Ministry of Fuel and Energy of Russia and the primary recipients of subsidies, and between the primary recipients and the final recipients (legal entities responsible for restructuring measures - coal companies and other organizations) These agreements will specify the purposes for which allocated subsidies may be spent as well as other conditions to be met by the entities receiving subsidies. 6. Annex)I -52- Page 28 of 34 Recipients of state support will be required to provide to the Coal Commission such financial and otlher information relevant to the level and use of subsidies. The type of such information and the frequency of reporting will be determined from time to time by the Coal Commission. All recipients of subsidies shall be subject to audit. State support funds will be allocated for each quarter on the basis of fulfilling commitments for the preceding quarter for targeted utilization of funds according to the executed agreements. The Ministry of Finance will be responsible for the distribution of State support via regional treasury departments in compliance with the allocation adopted by the Coal Commission and the agreements between the Ministry of Fuel and Energy and the recipients. 4. Social Policies. The short-term measures of the government in Social Policy include : (a) social protection of coal industry employees and residents of the coal regions, and (b) the maintenance and operation of social infrastructure in mining communities. 4.1. Social Protection The main actions in the field of social protection include: (a) the provision of social guarantees, benefits and compensation for workers made redundant during restructuring, members of their families, pensioners and disabled people retired from the coal industry, and (b) measures to promote employment opportunities and skills in areas affected by the restructuring of the coal industry. Russia has a system of social guarantees for people made redundant from enterprises. The Government will ensure that: * employees made redundant from mines receive statutory severance payments and compensation in accordance with the provisions of the Employment Law; a various ministries and agencies participate in the creation, financing and implementation of social programs during mass layoffs coordinate their assistance. The Government considers that the most humane and cost-effective way to reduce the size of the coal industry workforce is to limit recruitment, especially of employees who do not have experience in coal mining. Thus, it will be a condition of the disbursement of subsidies that any coal company receiving subsidies for operating losses - sub-category (9) - will reduce the number of vacancies so as to limit total recruitment in any quarter to less than 1% of the total number of its employees. This condition will be embodied in the agreements signed between the 7. Annex -53- Page 29%NAatry of Fuel and Energy and primary recipients of subsidies, and between primary recipients and final recipients of subsidies. Employees at mines announced for restructuring or closure will be offered counseling free of charge. These counseling services will be organized by the Federal Employment Services, financed by the mine out of funds allocated by the Coal Commission. Employees will be offered counseling on layoff procedures including: (a) an agreed procedure for advance notice of redundanicy, and (b) a rapid response mechanism which uses a joint consultative approach where trained advisors will work with employees and with the local communities. Workshops for managers of coal enterprises and unions on the management of mass layoffs and on the social protection available to redundant miners will be organized in all coal basins between June and October 1996. In June 1996 proposals for the procedure and forms of participation of the FES in the programs of social and economic development of coal-mining regions will be approved as necessary. By the end of July 1996 local employment services will prepare and submit to regional Coal Commissions action plans covering the measures to be undertaken by them at all mines scheduled to close or be restructured in 1996 and 1997 together with estimates of the budget required to implement these plans. Implementation of the action plans will commence by the end of September 1996. In the second half of 1996 five pilot Community Support and Employment Programs located in the coal basins affected to the greatest extent by restructuring (Pechora, Moscow, Kuzbass, Eastern Donbass and Kisel) will be established. These programs would finance social and transitional employment projects with funds allocated under sub-category (2) -- social protection expenditures -- of state support to the coal industry, and the resources of local Employment Funds. Primary recipients of budget funds allocated for the implementation of these programs will be the regional administrations situated in the coal regions mentioned above. Final recipients will be organizations authorized by local authorities. The FES will participate in the design and implementation of these Community Support and Employment Programs and the resources of local Employment Funds will be used in conjunction with them. At total of at least 200 billion rubles will be allocated in the second half of 1996 to the five pilot Community Support and Employment. These funds will support a range of projects, such as (a) the repair of the social and environmental infrastructure via public works, (b) the creation of small business opportunities, (c) retraining, (d) job counseling and search, and (e) other initiatives to create new jobs in viable enterprises. The pilot programs will build on initiatives developed by the Coal Commission in its Regional Coal RestruLcturing Programs. 8. Annex I -54- Page 30 of 34Special attention will be given to the needs of communities dominated by single mine enterprises, where coal restructuring will also have a severe impact on non-mining families. Among the activities to be SLipported by these programs will be the establishment of a center in Vorkuta which would provide information and counseling to individuals and families wishing to relocated from the Far North to other regions of Russia. The center will work in cooperation with relevant ministries and agencies (Federal Employment Service, Russian Migration Service, Social Insurance Fund etc.) to develop a uniform system of labor mobility assistance based upon information exchange and interaction with possible recipient regions. On the basis of the experience gained from these pilot programs the Government will develop larger Community Support and Employment Programs in each of the coal basins for implementation in 1997. 4.2 Support for social infrastructure. The government policy proceeds from the fact that restructuring of coal industry should not mean the deterioration in volume or quality of social services provided to people residing in mining communities. In the course of restructuring the following issues will be addressed with the help of funds allocated from state support: completing the transfer of social assets and housing owned by coal companies to municipal authorities; ensuring adequate finance for the operation and maintenance of social assets transferred to municipal authorities; demolition or renovation of dilapidated housing. To ensure that adequate funds are available to support social assets during the second half of 1996 the Government of the Russian Federation will allocate 1.6 trillion rubles to local authorities for transfers to local authorities to fund the development, replacement, operation, maintenance and renovation of social assets in coal basins. Work to be financed from these resources may include wage payments to social asset workers, rehabilitation of utility networks, winterization of social assets, repayment of debts to utilities, repairs to health and education facilities, and the purchase of fuel. In August 1996, the Coal Commission will consider a report on progress in transferring of social assets from mines to local authorities to be prepared jointly by Rosugol and regional authorities in coal basins. 5. Closure of non-viable and unprofitable mines. The Government began to close non-viable and unprofitable mines within the framework of the program on restructuring of coal industry in 1994. In 1994- 1995, coal production ceased at 37 mines. The schedule for preparation of mine closure proposals and other necessary documents to close 95 loss-making non-viable Annex I -55- Page 3hX1M has been approved. Forty mines have their closure proposals prepared and approved. Closure proposals for the remaining 55 mines are at various stages of preparation, i.e., being coordinated with local authorities, labor unions, state expertise. In 1996, the closure of Halmer-YLI mine in the Pechora coal basin was completed in full compliance with the relevant technical, social and economic requirements. Closure activities are now under way at 64 mines and include the cessation of production, the dismantling of equipment, and the demolition of surface structures. At 34 out of the above-mentioned mines. closure will be completed in 1996-1997, with 22-24,000 employees being laid off in 1996 . Russian federal legislation provides for standardized closure procedures for companies with various forms of management. However, in consideration of some specific features of the coal industry, the Coal Commission endorsed "The Basic Principles of Closing Non-Viable and Unprofitable Mines" in February 1996 in which uniform closure procedures for all types of companies, as determined by federal legislation, is particularized as regards the specific mines. At the same time, instructions were given to draft a document for Coal Commission approval, the final version of which should contain additional measures to ensure targeted disbursement of federal budget funds allocated for mine closures, guarantee employment and social protection of laid-off workers, and increase the role of local government in the implementation of social and economic development programs in coal regions. In June 1996, the final version of "The Basic Principles of Closing Non- Viable and Unprofitable underground and surface mines" will be submitted for approval to the Coal Commission. This will allow an opportunity to make the selection of underground and surface mines for closure more objective, to enhance the legal basis for their closure, to adopt time scales for financing closure activities from the federal budget, to eliminate the possibility of making closure decisions without ensuring the necessary financing and carrying out social protection measures guaranteed by legislation to workers laid off due to restructuring, as well as to their family members and veterans and disabled previously employed in coal industry; to make sure that no underground or surface mine is closed without the prior provision of appropriate social protection to redundant workers. In May-June 1996, the Coal Commission will consider, approve and inform all organizations involved of the schedule of financing mine closures to be allocated from the federal budget in the second half of 1996. In doing so, approximately 70% of funds will be earmarked for social protection measures to workers made redundant and approximately 30% for physical mine closure activities. The above schedules will result in completion of technical aspects of mine closure at no less than 20 mines by the end of 1996. In November-December 1996, the Coal Commission will approve a draft schedule for the allocation of budget funds for mine closures in 1997, within the framework of drafting the 1997 budget. 10. Annex I -56- Page 3k2tiVestment The Government's policy is to start a transition towards commercial financing of investment in the coal industry. In May-June 1996, the Coal Commission, while developing schedules for the allocation and distribution of state support for the second half of 1996, will decree that financing of capital development in the coal industry with state support funds in the second half of 1996 is to be conducted on non-repayable basis only at facilities where construction began before January 1, 1996. For all other coal industry investment projects, state support will be provided only in the form of loans at positive real interest rates and only for investment projects that are commercially viable. In 1997, the Government will complete the transition to allocating investment resources from state support funds for the coal industry on a commercial, repayable and competitive basis. To finance the construction and development of new profitable mines, non-state credit funds will be raised with Government guarantees. In November 1996, the Coal Commission will conduct an investment projects tender and then decide on the distribution of state support funds allocated for investment in the coal industry in 1997 based on the results of the tender. 7. Commercialization and Demonopolization. The principles and guidelines of reforming the coal industry management system are set out in "The Basic Trends of the Restructuring". Presidential Decree, No. 168, February 9, 1996, "On Measures to Improve the Structure of the Russian coal industry" is of paramount importance for the implementation of the above principles and guidelines. In compliance with the Decree, by end June 1996 the Government will convert the state company Rosugol into an open joint-stock company; By the end of October 1996 the Govemment will: * approve rules governing the trust management of state shares in coal companies, including those covering appointment of new trust managers and their obligations to the federal authorities: . transfer to the charter capital of these selected companies the state shares in related companies, as envisaged in Presidential Decree no. 168; . issue to potential bidders for trust management contracts for the selected companies all of the information required by them for the preparation of their bids. Using this mechanism, by the end of December 1996 the Government will ensure that new trust managers will control coal companies that produced in 11. Annex I -57- Page 3igr ate not less than 65 million tonnes of coal in 1995, i.e., approximately 25% of the volume of coal produced in the Russian Federation. Not later than three months after the competitive selection of trust managers of state shares in the above-mentionied coal companies the relevant Federal executive bodies will review the businiess plans submitted by the new trust managers. As far as other currently operating coal companies and joint-stock companies are concerned, by end December 1996, the Coal Commission will define measures to accelerate demonopolization in the coal industry in 1997. 8. Social Partnership The Government policy proceeds from the fact that social partnership mechanisms are the basis of interaction and information exchange amongst participants in the process of restructuring the coal industry. To foster constructive employer/employee interaction during collective bargaining, executive authorities at all levels should not take a direct part in the development and conclusion of collective agreements - which requires the regulatory and legal basis in effect to be modified. Therefore, by the end of 1996, the Government will develop proposals on the changes in the procedures regarding collective agreement drafting and conclusion such as will not require its direct participation, while providing an independent role for employer and employee representatives in the conclusion of collective agreements, covering, among other things, the level and form of wages, depending on the financial capacity of enterprises and in conformity with legislation in force. The development of social partnership mechanisms of various groups of residents in coal regions whose interests are directly affected by restructuring of coal industry will be carried out by enhancing regional Coal Commissions set up in 1994- 1995, setting up such commissions in coal regions where they have not yet been established. On the local level, oversight committees are to be formed with the local heads of administrations of mining communities as the head and consisting of representatives of various affected groups. The main objective of the oversight committees will be to determine the strategy for local development, coordination of the development and implementation of local development programs, and the social protection for laid-off workers and residents of mining communities. Oversight committees will determine the guidelines for the disbursement of funds allocated to finance local development programs. In Mlay-June 1996, local oversight committees wi]l be formed in five pilot mining towins of largest coal-mining regions. 12. Annex I -58- Page 34 of 34 In May-June 1996 the organization of regional Coal Commissions in the Rostov and Tula regions will be strengthened and improved. Special working groups will be set up under the authority of regional administrations to ensure trouble-free operation in terms of organizational and technical assistance are concerned. Regional Coal Commissions will be set up in all coal regions before January 1, 1997. In about 30 mining communities local oversight committees will be established. Measures will be taken to ensure that miners and residents of mining communities are interested in actively participating in the process of restructuring of the coal industry. It is thus envisaged that: . workers employed by coal companies and residents of coal regions will be provided with information on programs and the course of restructuring, of coal industry, forms of legal and social protection of miners and their family members; * local public organizations will be strengthened in order to achieve more effective social and legal protection of coal region residents; * monitoring of the restructuring of coal industry will be conducted and coal region residents will be informed about the results of the monitoring through mass media. 9. Organizational support In order to pursue the Government's policy on restructuring the coal industry it is also necessary to ensure resolution of the following second-priority tasks: o strengthening of organizational, technical, informational and analytical aspects of the Coal Commission's operation; monitoring of how the mechanism of state financing of restructuring of coal industry is working and development of improvements and corrective measures; . organization of independent audits of legal entities which are the recipients of state support funds; . organization of complex monitoring of social and economic situation in coal regions, informing the public, coal industry workers and residents of coal regions on the course and progress of restructuring of coal industry. In order to resolve the above-mentioned issues, a special fund will be set-up in May-June 1996, which will operate in accordance with the law on non-profit organizations and the Russian Civil Code. The fund will be adequately financed, including from technical assistance funds. Please find attached an official English translation of this Letter. RUSSIA - COAL SECTOR ADJUSTMENT LOAN (Coal SECAL) SUMMARY OF GOVERNMENT REFORM PROGRAM OBJECTIVES ACTIONS TAKEN PRIOR TO GOVERNMENT COMMITMENTS TIMING CONDITION __ APPRAISAL OF A. Amount. Structure, and Mechanisms of State SuDDort to the Coal Industry Reduce the burden of coal State support to the coal industry reduced A schedule of state support to the coal industry for 6196 Board subsidies on the federal from 1.04% of GDP in 1993 to 0.45% of the second half of 1996 has been approved and made Presentation budget and improve its GDP in 1995. Budget subsidies are planned public with details by expenditure category and structure. at RblO.4 trillion for 1996 or 0.36% of recipient for the second half of 1996, including: projected GDP. Improve transparency of a. not less than Rbl.6 trillion to regional allocation of state support to Government has established arrangements governments to finance expenditures on the coal industry. to channel state support for the coal development, replacement, rehabilitation, industry directly to local coal companies maintenance and operation of social assets divested and oblast/local governments - 90% from the coal sector to local governments; coverage by end 1995. b. not less than Rb200 billion in total to Kemerovo Govermnent has issued Resolution No. 598 Oblast, the Komi Republic, Rostov Oblast, Perm of May 17, 1996, On Confirmation of the Oblast, and Tula Oblast to fnance pilot Community Regulation on State Financing of Measures Support and Employment Programs for coal Regarding Coal Industry Restructuring, communities within these regions; and giving the Inter-Agency Commission authority to approve state support to coal c. not less than Rb300 billion to coal companies to industry and monitor its use. fmance qualifying expenditures on social protection by coal companies for mine workers, former mine workers and their dependants. l During the second half of calendar 1996, actual 11/96 Second transfers from the allocation for state support to the Tranche coal sector in the 1996 budget will be consistent with Release the schedule of state support to the coal industry for the second half of calendar 1996. Wed Jun 5, 1996, 13:59 RUSSIA - COAL SECTOR ADJUSTMENT LOAN (Coal SECAL) OBJECTIVES ACTIONS TAKEN PRIOR TO GOVERNMENT COMMITMENTS TIMING CONDITION APPRAISAL OF Government's proposal for state support to the coal 11/96 Second industry for 1997 to be included in the federal budget Tranche and the actual quarterly transfers during 1997 Release incorporate and are consistent with the following parameters and schedules: a. the Budget category State Support for the Coal Industry will exclude financing for transferred social assets as such financing will be included in the overall federal budget category which provides for the financing of social assets transferred to local authorities throughout Russia; b. not less than one-third of State Support for the Coal Industry will be allocated to: (i) physical costs of mine closure, (ii) qualifying expenditures on social protection by coal companies, (iii) Community Support and Employment Programs for coal communities financed through regional and/or local authorities, and (iv) disability compensation for disabled workers at closed mines; c. State Suppon for the Coal Industry excluding the items specified in (b.) above and excluding loans to mining companies at positive real interest rates for production development investment will decline by at least 40% in real terms in 1997 relative to 1996. B. Social Policies Ensure sustainable delivery Approximately 72% of coal industry Adequate financing for divested social assets - see Continuing of essential social services. housing stock (and from 9% to 66% of Section A above. other social assets) had been transferred to regional or local governments at end 1995 - but without adequate measures to ensure l___________________________ satisfactory level of service after transfer. Ensure that employment The Inter-Agency Commission has confirmed that, 6/96 Board policies minimize the need with effect from July 1, 1996, state support for Presentation for compulsory operating losses wil be available only to coal redundancies. companies that have reduced the number of vacancies so as to limit total recruitment in any quarter to less than 1 % of the total number of employees. o_ _ OBJECTIVES ACTIONS TAKEN PRIOR TO GOVERNMENT COMMITMENTS TIMING CONDITION APPRAISAL OF It has been demonstrated to the satisfaction of the 11/96 Second Bank that, during the calendar quarter immediately Tranche preceding the Second Tranche Release Review, no Release state support for operating losses was made available to coal mines which have recruited employees in excess of 1 % of their respective total number of employees during such period. Strengthen the social safety The Government has instructed the Federal 6/96 Board net in areas where coal- ERmployment Service to establish, by the end of Presentation related unemployment is September 1996, the capability to deliver pre- expected to be high. redundancy services including advance notice and counselling to all workers in the coal industry threatened with redundancy. _ The Federal Employment Services has initiated the 11/96 Second operation of regional offices in all regions where mines Tranche are being closed, with adequate capacity to deliver pre- Release redundancy services free of charge to employees prior to cessation of coal production for all coal industry employees of mines whose closure has been announced. Government has established the necessary institutional 11/96 Second framework, which includes the participation of the Tranche Federal Employment Services, and has initiated, as Release agreed and incorporated in the Coal Sector Restructuring Implementation Assistance Project, the activities of the Community Support and Employment Programs in the Kuzbass, Eastern Donbass, Pechora, Moscow region and Kizel coal basins. Wed Jun 5, 1996, 13:59 OBJECTIVES ACTIONS TAKEN PRIOR TO J GOVERNMENT COMMITMENTS TIMING CONDITION _____ APPRAISAL _ OF C. Closure of Non-Viable and Unprofitable Mines Close unviable mines in a A total of 37 mines stopped producing coal An implementation schedule for mine closures in the 6/96 Board socially and in 1994-95. A schedule for preparation of second half of 1996 - consistent with state support Presentation environmentally acceptable mine closure proposals and other necessary allocated for this purpose - has been approved and manner. documents to close 95 loss-making non- made public. viable mines has been approved. Forty mines have their closure proposals prepared and approved. Closure proposals for the remaining 55 mines are at various stages of preparation, i.e., being coordinated with local authorities, labor unions, state expertise. Permanent closure has been completed at one mine. D. Investment Ensure that new investments The Inter-Agency Commission has confirmed that, with 6/96 Board are commercially viable. effect from July 1, 1996, state support funds for Presentation investment wi]l be available on a non-repayable basis only for projects where construction began before January 1, 1996. For all other investment projects in the coal industry, state support will be available only sJ on a repayable basis at positive real interest rates. E. Commercialization and Demonooolization Develop strategy lor Presidential Decree No. 168 of 9 February The Inter-Agency Commission has approved and 6/96 Board commercialization, 1996: (i) transferred coal subsidy allocation made public a Demonopolization Program to Presentation demonopolization and responsibility irom RosUgol to the Inter- conclude, by December 31, 1996, the appointment of privatization of the coal Agency Commission; (ii) instructed new Trust Managers. These measures will include the industry over the longer- Government to convert RosUgol into 100% issuance, by October 31, 1996, to potential bidders term federally owned joint stock company; and for trust management contracts all of the information (iii) empowered the State Property required by them for the preparation of bids. The Committee to delegate management of state companies for which new Trust Managers will be shareholding to trust managers other than appointed by December 31, 1996 will be selected so RosUgol. that their aggregate production of coal in 1995 was not less than 65 million tons, i.e., approximately 25% of the Russian coal industry. Government has taken all actions required to be taken 11/96 Second in accordance with the Demonopolization Program. Tranche CD Release Wed Jun 5, 1996, 13:59 OBJECTIVES | ACTIONS TAKEN PRIOR TO | GOVERNMENT COMMITMENTS | TIMING CONDITION APPRAISAL __________________J -OF ________________________ ~~~~~F. Social Partnership Prepare a socially Social Assessments completed in Vorkuta The Inter-Agency Commission has approved and 6/96 Board sustainable coal and in the Kuzbass (March 1996). made public the indicators and arrangements for Presentation restructuring program in social impact monitoring, financial monitoring, and each regional coal basin. auditing of a set of subsidy recipients. Regional Inter-Agency Conmmissions Government has demonstrated, on the basis of social 11/96 Second created in 1995. Preparation of Regional impact and monitoring reports for the calendar Tranche Coal Restructuring Programs underway quarter preceding the Second Tranche Release Release since late 1995. Review, overall compliance with agreed social impact indicators, and has made public such reports. G. Orjanizational Supoort Enhance institutional Inter-Agency Commission for Socio- Government has prepared and furnished to the Bank a 11/96 Second capacity in the design and Economic Problems of Coal-Producing report on the tinancial performance of the regional Tranche implemenLation of the coal Regions (Inter-Agency Corrumission) coal companies. Release restructuring program created mid-1993. Inter-Agency Commission issued initial proposals (Basic Trendsfor Coal Restructuring) in July 1995. Government has requested the Bank to Government has submitted to the Bank audits on five 11/96 Second finance a Coal Sector Restructuring coal companies, which are main (the largest) Tranche hnplementation Assistance Project (IAP) to recipients of state support. Release strengthen institutional arrangements for: (a) participatory activities of relevant stakeholders; (b) social programs; (c) strengthening subsidy management; (d) technical assistance and training for commercialization and demonopolization of coal companies; (e) technical assistance for environmental management; (f) technical assistance for mine closure guidelines; (g) support to REFORMUGOL, the non- commercial foundation charged with implementation of the IAP. Wed Jun 5, 1996, 13:59 - 64 - Annex 3 Page 1 of 1 Status of IMF Operations in Russia Russian Federation: Fund Relations (As of February 29, 1996) I. Membership Status: Joined June 1, 1992; Article XIV In millions In percent II. General Resources Account: of SDRs of cuota Quota 4,313.0 100.0 Fund holdings of currency 11,470.97 266.0 Reserve position in Fund 0.77 -- In millions Percent of III. SDR Degartment: of SDRs allocation Holdings 279.32 -- In millions In percent IV. Outstanding Purchases and Loans: of SDRs of cuota Stand-by arrangements 5,002.10 116.0 Systemic Transformation 2,156.55 50.0 V. Financial Arrangements: Expira- Amount Amount Approval tion Approved Drawn Date Date (SDR million) (SDR million) Tape Stand-by 4/11/95 4/10/96 4,313.10 4,313.10 Stand-by 8/05/92 1/04/93 719.00 719.00 VI. Proiected Oblizations to Fund (In millions of SDRs; based on existing use of resources and present holdings of SDRs): Forthcomine 2/29/96 1296 L997 1998 1999 2000 Principal -- 329.5 359.5 673.9 2,426.1 2,111.6 Changes/Interest -- 228.5 291.8 272.9 212.9 108.2 Total -- 558.0 651.3 946.8 2,639.0 2,219.8 -65- Annex 4 Page 1 of 3 Russian Federation - Key Economic Indicators UnifiedSurvey FY96 projection (November 1995) Actual Estimate Projected Indicator 1990 1991 1992 1993 1994 1995 1996 1997 National accounts (as % GDP at current market prices) Gross domestic product 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Agriculture' 15.5 13.8 7.2 8.3 6.4 - - Industry' 44.3 44.4 47.6 44.0 35.1 - Services' 33.3 38.2 47.4 42.2 50.0 - - - Total Consumption 68.1 60.6 61.6 65.0 70.9 74.4 75.6 77.6 Gross domestic fixed 28.7 23.4 18.5 22.5 24.0 22.0 22.0 20.0 investment Government investment 7.1 7.1 4.2 4.5 5.7 2.6 4.6 4.9 Private investment 23.0 29.2 29.1 26.5 21.3 22.4 19.4 17.1 (includes increase in stocks) Exports (GNFS)b 18.9 16.6 55.0 36.2 26.7 22.3 19.0 18.4 Imports (GNFS) 17.2 13.5 49.9 32.3 24.5 21.7 18.6 18.0 Gross domestic savings 31.9 39.4 38.4 35.0 29.1 25.6 24.4 22.4 Gross national savings' 31.7 39.2 33.8 32.5 27.6 24.3 22.8 20.8 Memorandum items Gross domestic product 1100068 803736 97962 180181 285776 385736 489402 553685 (USS million at current prices) Grossnationalproductper 4,120 3,923 3,108 2,569 2,051 2,150 2,559 3.319 capita (USS, Atlas method) Real annual growth rates (%, calculated from 1993 prices) Gross domestic product at -3.6% -5.0% -14.5% -8.7% -12.6% -4.0% 2.5% 4.0% market prices Gross Domestic Income .. -13.6% -17.4% -9.2% -12.3% -2.6% 2.8% 4.5% Real annual per capita growth rates (%, calculated from 1993 prices) Grossdomesticproductat -4.0% -5.2% -14.5% -8.6% -12.5% -3.9% 2.7% 4.2% market prices Total consumption -30.7% -2.2% -2.8% -4.4% -0.3% 1.2% 4.2% Private consumption .. -30.4% .. .. -2.4% .. .. 4.7% (continued) -66- Annex 4 Page 2 of 3 Russian Federation - Key Economic Indicators (Continued) Actual Estimate Projected Indicator 1990 1991 1992 1993 1994 1995 1996 1997 Balance of Payments g/ (USSm) Exports (GNFS)b 80300 53800 41577 51276 58506 68526 74373 82428 Merchandisc FOB 80300 53800 41577 44454 51398 60505 65436 72429 Imports (GNFS)b 74000 46900 42706 47422 54008 68421 74136 81798 Merchandise FOB 72000 44500 37206 34900 39500 50500 55100 60900 Resource balance 6300 6900 -1129 3854 4498 105 236 629 Net current transfers 0 0 0 0 0 0 0 0 (including official current transfers) Current account balance 4100 6300 -2629 2160 598 -4395 -7766 -8284 (after official capital grants) Net private foreig direct -400 -100 700 386 -1000 2200 2500 2500 investment Long-term loans (net) 2000 5500 2600 -10100 -11900 -9100 -3568 -866 Official 4695 3816 1845 988 614 -873 1782 1074 Private -2695 1684 755 -11088 -12514 -8227 -5350 -1940 Othcr capital (net, including -14400 -12300 129 10954 8402 15095 9686 7527 errors and omissions) Change in reservesd 8700 600 -800 -3400 3900 -3800 -852 -877 Memorandum items Resource balance (% of 0.6% 0.9% -1.2% 2.1% 1.6% 0.0% 0.0% 0.1% GDP at current market prices) Real annual growth rates (1993 prices) Merchandise exports .. -34.5% -14.8% 24.8% 15.6% 6.2% 4.5% 6.9% (FOB) Primary Manufactures .. .. .. .. .. .. Merchandise imports .. -48.2% -19.8% -0.3% 11.9% 16.0% 5.6% 8.0% (CIF) Public fimance (as % of GDP at current market prices)' Current revenues .. .. 43.2 38.6 35.7 29.7 34.4 36.2 Current expenditures .. .. 57.3 41.8 40.5 33.9 36.0 35.4 (Continuea) -67- Annex 4 Page 3 of 3 Russian Federation - Key Economic Indicators (Continued) Actual Estimate Projected Indicator 1990 1991 1992 1993 1994 1995 1996 1997 Current account surplus (+) .. .. -14.2 -3.2 -4.8 -4.2 -1.6 0.8 or deficit (-) Capital expenditure .. .. 7.7 4.8 5.5 3.1 4.5 4.8 Foreign fnancing .. .. .. 5.3 1.2 0.6 1. I1 Monetary indicators M2/GDP (at current market .. .. 18.9 13.9 11.5 10.6 - - prices) h/ Growth of M2 (%) .. .. 778.2 340.6 191.9 74.0 - - Private sector credit growth/ .. .. .. 72.0 31.4 0.8 total credit growth (%) Price indices( 1993 =100) Merchandise export price 125.8 128.7 116.7 100.0 100.0 110.9 index g/ Merchandiseimportprice 85.4 101.9 106.3 100.0 101.1 111.5 index g/ Merchandise terms of trade 147.2 126.3 109.8 100.0 98.9 99.5 index g/ Real exchange rate 620.1 393.2 48.7 100.0 167.9 224.6 (US$ILCU)Y Real interest rates Consumer price index 5.6% 92.6% 1354% 895% 303% 189% (% growth rate) GDP deflator 16.6% 129% 1506% 878% 320% 191% (% growth rate) a. GDP components are estimated at factor cost. b. "GNFS" denotes "goods and nonfactor services." c. Includes net unrequited transfers excluding official capital grants. d. Includes use of IMF resources. e. Should indicate the level of the government to which the data refer. f "LCU" denotes "local currency units." An increase in USS/LCU denotes appreciation. g/ Excluding transactions with former Soviet republics. h/ Ratio of M2 to 12 times December GDP. -69- Annex 5 Page 1 of 1 Russian Federation - Key Exposure Indicators Uni,fed Survey FY96 projection (November 1995) Actual Estimate Projected Indicator 1990 1991 1992 1993 1994 1995 1996 1997 Total debt outstanding and 59,817 67,590 78,992 83,888 94,232 106536 116568 127333 disbursed (TDO) (USSm)' Net disbursements (USSm)" 2,000 5,500 2,213 -9,894 -11956 -200 132 3,134 Total debt service (TDS) 7,800 7,700 14,300 19,700 19,200 18,600 18,803 16,506 (USSm)"d Debt and debt service indicators (%/0) TDO/XGSb 73.8 124.5 186.0 162.0 159.7 153.9 155.9 153.7 TDO/GDP 5.4 8.4 80.6 46.6 33.0 27.6 23.8 23.0 TDSIXGS d 9.6 14.2 33.7 38.0 32.5 26.9 25.1 19.9 ConcessionalVrDO 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 IBRD exposure indicators (°) IBRD DS/public DS 0.0 0.0 0.0 0.1 0.2 0.2 0.5 1.1 Preferred creditor DS/public 0.3 0.6 0.3 1.4 2.6 3.1 7.6 10.7 DS IBRD DS/XGS 0.0 0.0 0.0 0.0 0.1 0.1 0.1 0.2 Share of lBRD portfolio f/ .. .. 0.0 0.0 0.0 0.8 1.9 3.1 IFC (US$m) Loans Equity and quasi-equity /c MIGA MIGA guarantees (USSm) a. Includes public and publicly guaranteed debt, private nonguaranteed, use of IMF credits and net short- term capital. b. "XGS" denotes exports of goods and services, including workers' remittances. c. Includes equity and quasi-equity types of both loan and equity instruments. d. Scheduled debt service payments before debt relief . e. Scheduled amortization payments before debt relief . f. Including the present value of guaranties. -70- Annex 6 Page 1 of 2 Poligy and Spcial 12.velopment Indicators Kussian F ederation Most SameregioiAcometgoup Next Latest singk year recent Ei Trop wMr. higher Unitof esdtimat & Central middk- income Indicator measure 1970-75 1980485 1989-94 Asia income group Priority Poverty Indicators POVERTY Upper poverty line local curr. 20,578 Headcount index % of pop. 32 Lower poverty line local curr. .. 10,289 Headcount index % of pop. 12 GNP per capita USS 2,640 2,270 1,670 4,710 SHORT TERM INCOME INDICATORS Unskilled urban wages local curr. .. Unskilled rural wages Rural terms of trade Consumer price index 1987=100 .. Lower income Food' Urban Rural SOCIAL INDICATORS Public expenditure on basic social services % of GDP .. 7.6 Gross enrollment ratios Primary % school age pop. .. 104 107 97 104 107 Male 104 107 97 105 Female 104 107 97 101 Mortality Infant mortality per thou. live births .. 21 19 23 36 36 Under 5 mortality .. .. 24 31 47 43 Immunization Measles % age group .. .. .. .. 77.4 82.9 DPT .. .. .. .. 82.0 74.7 Chad malnutrition (under-5) .. .. .. Life expectancy Total yeam .. 69 64 68 67 69 Female advantage .. 10.2 13.8 9.7 6.4 5.8 Total fertility rate births per woman 2.0 2.1 1.4 1.9 2.7 2.8 Maternal mortality rate per 100,000 live births .. 68 52 Supplementary Poverty Indicators Expenditures on social security % of total gov't exp. .. .. 21.4 Social security coverage % econ. active pop. .. .. .. Access to safe water. total % of pop. .. .. .. .. .. 86.2 Urban .. .. .. .. .. 94.0 Rural .. .. .. .. .. 64.8 Access to health care .. .. .. Population growth rate GNP per capita growth rate Development diamondb 6+ T (avmgeannal,percnt) 1* (average annual, percent)Liexpcay 4 - 1~~~~~~~~0- Life expetancy 45 2 - - ______-_i_v _______ GNP Gross 2 ~~~~~~~~0 per primary capita \ enrollment 0 -5 - -2-1 1970-75 1980-85 1989-94 1970-75 1980-85 1989-94 Access to safe water : Russian Federation _ Russian Federation - Lower-middle-incoroe - Lower-middle-income a See the technical notes. p.387. b. The development diamond, based on four key indicators.shows the average level of development in the country compared with its income group. See the introduction. -71 - Annex 6 Page 2 of 2 Russian Federation i.atest smgii ,w most ~ Next Unit of estimate & Canotra middke- incomeu Indicator measure 1970-75 1980485 1989-94 Asia income group Resources and Expenditures HUMAN RESOURCES Population (mre=1994) thousands 134,200 143,858 148,350 487,445 1,096,881 472,807 Age dependency ratio ratio 0.47 .. 0.49 0.54 0.63 0.62 Urban % of pop. 66.4 71.9 73.2 65.2 55.9 73.7 Population growth rate annual % ..0.8 .0. 1 0.4 1.3 1.7 Urban ..1.4 .0.3 1.4 2.7 2.5 Labor force thousands 70,745 76.346 77,048 236.973 488,647 198.841 Agriculture % of labor force 17 15 14 24 36 21 Industry '43 43 42 36 26 27 Female -50 49 49 45 40 34 Labor participadon rates Total % of pop. 53 53 52 49 45 42 Female 26 26 25 43 36 29 NATURAL RESOURCES Area thou. sq. km 17,075.40 17,075.40 17,075.40 24,354.02 40,594.43 20,668.74 Density pop. per sq. km 7.86 8.42 8.70 19.96 26.66 22.49 Agricultural land % of land area . .... 41.05 41.49 Change in agricultural land annual % .. -0.23 -1.26 -1.26 -1.38 0.02 Agricultural land under irrigation % 1.67 2.66 2.38 6.73 11.40 9.28 Forests and woodland thou. sq. km ... . 710.81 5,969.25 7,520.52 Deforestation tnet) % change, 1980-90 . .. INCOME Household income Share of top 20% of households % of income . .38 Share of bottom 40% of households ...20 Share of bottom 20% of households . .7 EXPENDITURE Food %ofGDP ... 18.0 Staples ...2.4 Meat, fish, milk, cheese, eggs .. .6.0 Cereal imports thou, metric tonnes . . 3,687 33,202 68,936 43,633 Food aid in cereals . . 1,124 4,392 5,771 67 Food production per capita 1987=100 . ....102 102 Fertilizer consumption kg/ha . . 25.1 41.4 46.3 68.9 Share of agriculture in GDP % of GDP .. 11.1 6.4 12.7 14.0 8.0 Housing %ofGDP . .4.5 7.2 Average household size persons per household . .2.8 Urban ...2.8 Fixed investment: housing % of GDP ...5.7 5.2 Fuel 2ad power % of GDP . .0.7 1.2 Energy consumption per capita kg of oil equiv. 4,422 6,317 4,038 2,756 1.602 1,618 Households with electricity Urban % of households . .. Rural Transport and comsmunication % of GDP ...4.2 Fixed investrnent: trasport equipment .. . 1.9 Total road length thou. km 638 783 934 . INVE.STMENT IN HUMAN CAPITAL Health Population per physician persons 286 222 222 362 3.064 Population per nurse 95 83 93 248 Population per hospital bed 81 74 79 136 592 402 Oral rehydyration therapy (under-5) % of cases ... . . .S Education Gross enrollment ratios Secondary % of school age pop. ..97 88 86 63 59 Female ..98 91 90 62 Pupil-teacher ratio: primary pupils per teacher ... .. .25 Pupil-teacher ratio: secondary . .. Pupils reaching grade 4 % of cohort . .. Repeater rate: primnary % of total enroll . .* Illiteracy % of pop. (age 15+) . .2 . .13 Female % of femn. (age 15+) ... . . .I Newspaper circulation per thou. PM,. 842 918 580 ..236 135 World BanLk Intemational EconomTics Department. April 1996 Annex 7 Russian Federation - Balance of Payments Page 1 of 2 (Excluding transactions with forner Soviet republics) (USS millions at current prices) Unified Suniv. FY96 projection (November 1995) Actal Estimate Projecdon 1990 1991 1992 1993 1994 1995 1996 1997 Total exponls of GNFS' 80300 53800 41577 51276 58506 68526 74373 82428 Merchandise (FOB) 80300 53800 41577 44454 51398 60505 65436 72429 Nonfactor savices 0 0 0 6822 7108 8021 8936 9998 Total Impots of GNFS 74000 46900 42706 47422 54008 68421 74136 81798 Merchandise (FOB) 72000 44500 37206 34900 39500 50500 55100 60900 Noeifactor services 2000 2400 5500 12522 14508 17921 19036 20898 Resource balance 6300 6900 -1129 3854 4498 105 236 629 Net factor income -2200 -2200 -4500 -4500 4700 -5300 -8003 -8914 Factor receipts 700 500 900 500 500 700 400 400 Factor payments 2900 2700 5400 5000 5200 6000 8403 9314 Interest (scheduled) 2900 2700 5400 5000 5200 6000 7924 8585 Total interest paid' 2642 3044 357 681 1208 3214 5754 6683 Netadjustments to scheduled interest 258 -344 5043 4319 3992 2786 2170 1902 Other factor paymnents 0 0 0 0 0 0 479 729 Net pnvate current transfers 0 0 0 0 0 0 0 0 Current receipts, of which 0 0 0 0 0 0 0 0 Wokers' ramittances 0 0 0 0 0 0 0 0 Current paymfents 0 0 0 0 0 0 0 0 Net official current transfers 0 0 0 0 0 0 0 0 Curernt account balance 4100 4700 -5629 -646 -202 -5195 -7766 -8284 Officid capital grants 0 1600 3000 2806 800 800 0 0 Private uivestment (net) 400 -100 700 386 -1000 2200 2500 2500 Direct foreign investment 400 -100 700 386 -1000 2200 2500 2500 Portfolio investments 0 0 0 0 0 0 0 0 Net LT' borrowing 2000 5500 2600 -10100 -11900 -9100 -3568 -866 DisbursneAen*sb 16978 13393 12600 4936 2278 4927 7811 7555 Repayments (scheduled) 4900 5000 8900 14700 14000 12600 10379 7421 Total principal repaid' 7942 9392 948 1558 2277 3970 3649 2691 Net adjustments to scheduled repayments -3042 4392 7952 13142 11723 8630 6730 4730 Net other LT inflows -10078 -2893 -1100 -336 -178 -1427 -1000 -1000 a. Goods and nonfactor services b. Historical data from Debt Reporting System (DRS); other data projected by country operations division staff. c. L1r denotes long-tkrm- Annex 7 Russian Federation - Balance of Payments (continued) Page 2 of 2 (Excluding tranauctions with former Soviet republics) (USS millions at current prices) Unified Survey FY96 projection Adual Estimaue Projecdon 1990 1991 1992 1993 1994 1995 1996 1997 Adjustments to scheduled debt sevice -2784 -4736 12995 17461 15714 11416 8900 6632 Debt scvice no paid -2784 4736 12995 17461 15714 25148 8900 6632 Reduction in srrus/prepnyents (-) 0 0 0 0 0 -13732 0 0 Other capital flows -11616 -7564 -12866 -6507 -7313 3679 786 895 Net shmt4n capita 0 0 -1400 -1300 -1600 3500 1000 1200 Net capital flows n.e.i.' 0 -700 -6200 -900 -8700 0 0 0 Enors and omissuons -11616 -6864 -5266 -4307 2987 179 -214 -305 Change in nrt intenaional resarves 8700 600 -800 -3400 3900 -3800 -852 -877 (- indcates uxeease tu asets) Merandman items Total gross reserve of which 2813 4531 8875 6475 15675 19227 22903 Total reserves minu gold 1300 16 1953 5816 3416 12616 16168 19844 Gold (at year-cnd London price) .. 2797 2578 3059 3059 3059 3059 3059 Total gross resaves (in monts' inports G&S4 .. 0.7 1.1 2.0 1.3 2.5 2.8 3.0 Exchange rates Annual average (LCUAJS$f 0.6 1.7 196.0 951.9 2204.8 4559.7 5063.9 52812 At ed year (LCU/USS) 0.6 100.0 414.5 1247.0 3550.0 4571 8 5400 2 51814 Index real average exchange rate (1993=100) 620 1 393.2 48.7 100.0 167.9 224.6 275.5 292.9 Current Account Balance as % GDP 0 4 0.6 -5 7 -0.4 -0.1 -1 3 -1.6 -1 5 d 'rne i ' denotes 'not elsewhere included.' e. 'G & S' denotes 'goods and services.' f *LCUI denotes local currency units.I g The index of the real exchange rate reflects USS/LCU. so an increase is an appreciation at the real exchange rate. Annex 8 Russian Federation - Public Finance Page I of 2 (at current prices and exchange rates) Unified Survey FY96 projection (November 1995) Actwal Eilimate Projection 1990 1991 1992 1993 1994 1995 I996 1997 Government budget (billions LCUs) /a Total cueent revenues .. .. 8285.8 66126.2 224943.3 522333.1 853263.5 1058719.8 Direct taxes .. .. 4272.7 34988.9 113050.3 283437.4 431186.0 518431.0 Indirect taxes .. .. 2845.9 28643.9 109530.5 223001.1 400958.4 516947.2 On domestic goods and sejvices .. .. 20199.3 87323.4 189583.1 368740.7 478933.9 On internatioral trade .. .. 8444.6 22207.1 33418.0 32217.7 38013.2 Nontax receipts .. .. 1167.2 2493.4 2362.5 15894.6 21119.1 23341.6 (of which current grants) Total Curent Expenditures .. .. 11004.8 71691.1 255478.4 595692.9 891804.2 1034210.6 1nteest on extern debt .. .. 1058.4 3201.4 8577.3 25534.3 36915.8 40506.5 Interestondomesticdebt .. .. 78.6 1194.6 7498.4 35154.1 29123.0 32577.9 Transfes to prvate sector 0.0 0.0 0.0 0.0 0.0 0.0 Transfers to other NFPSb .. .. 3124.6 13774.5 51784.5 132877.3 220141.3 299027.8 Subsudies .. .. 4108.9 19151.4 56182.3 121638.3 160882.4 145035.1 Consumption 133.9 209.7 2634.3 34369.3 131435.9 280489.0 444741.8 517063.3 Wages and salaries Olher consunption Budgetary Savings .. -2719.0 -5564.9 -30535.0 -73359.8 -38540.7 24509.2 Capital Revenues .. 62.3 318.9 748.4 8794.2 12391.4 14620.5 Total Capital Exenditures .. 1478.3 8261.5 34969.5 54524.0 111329.4 140758.1 Cpital transfers .. .. 4296.3 19998.2 20842.3 56886.1 71636.4 Budgeary fixed investment .. .. 3965.2 14971.4 33681.8 54443.4 69121.8 Overall balance (- = deficit) .. .. -4135.0 -13507.5 -64756.2 -119089.6 .137478.7 -101628.5 Souresof facing(+) .. .. 4135.0 13507.5 64756.2 119089,6 137478.7 101628.5 OfTicial capital grants .. .. .. 2671.0 0.0 0.0 0.0 0.0 Net exnal boIrowing .. .. .. 6377.6 7276.0 10031.3 27532.4 31259.2 Netdisburseents(cash) .. .. .. .. 7276.0 10031.3 27532.4 31259.2 Adjustments to scheduled principal repayments (-) .. .. .. .. 0.0 0.0 0.0 0.0 Adjustnts to scheduled debt sevice(+) .. .. .. .. 0.0 0.0 0.0 0.0 Net monetary system .. .. 1023.0 9400.0 60200.0 43132.0 0.0 0.0 Net other domestic borrowing .. .. .. -4941.0 -2719.8 65926.3 109946.3 70369.3 a. 'LCU' denotes local curency unit. b. 'NFPS' denotes nonfmancial public sector.' Annex 8 Russian Federation - Public Finance (continued) Page 2 of 2 (at current prices and exchange rates) Unified Survey 1FT96 projection Acuel Estnate Projecdion 1990 1991 1992 1993 1994 1995 1996 1997 Shares of GDP (%) Curent revenues 43.2 38.6 35.7 29.7 34.4 36.2 Current expenditure 57.3 41.8 40.5 33.9 36.0 35.4 Budgetary savngs -14.2 -3.2 -4.8 -4.2 -1.6 0.8 Capital revenues 0.3 0.2 0.1 0.5 0.5 0.5 Capital expcnditures 77 48 5.5 3.1 4.5 48 Overall Balance (- = deficit) -21.5 -7.9 -10.3 -6.8 -5.5 -3.5 Officia capital grants 1.6 0.0 0.0 0.0 0.0 Net extemnal boirowing 3.7 1.2 06 1.1 1.1 Monetary systen credit 5.3 5.5 9.6 2.5 0.0 0.0 Other domestic fuiancing -2.9 -0.4 3.7 4.4 2.4 Government Debt (DOD /c at the end of the year, in (billions LCUs, wuless noted)) External debt 139,764 430,615 Extena debt(inUSSrullions) c/ . 112,081 121,300 Debt to monetay system 177 1,200 10,600 70,800 113,932 113,932 113,932 Other domestic debt 7,100 22,300 Total government debt 157464.4 523715.0 Total govemment debt as percent of GDP 91.8 83.1 Tax burden indicators (%) t Direct taxs / GDP 22.3 20.4 17.9 16.1 17.4 17.7 Indirect tax on donestic G&Sd / GDP 11.8 13.9 10.8 14.9 16.4 Indirect taxes on donestic G&S l private consumption 26.2 27.7 18.4 25.8 27.3 Taxeson intemationaltrade/ merchandiseiniports 25.4 25.5 145 115 11.8 c. 'DOD' denotes 'debt outstanding and disbursed' b 'G&S' denotes 'goods and services.' c. Including debt to official creditors other than Paris Club (Kuwait, South Korea, meniber states of ex-CMEA). -76- Schedule B Russian Federation at a glance Page I of 2 Europe & Lower. POVERTY and SOCIAL Rusasan Central middle. Federation Asia Income Development dlamond, Populaton mid-1994 (millions) 148.3 498 1,097 GNP per capita 1994 (US$, Atlas method) 2,320 2.430 1,680 Life expectancy GNP 1994 (billions USS, atAttas conversion factor) 344.4 1,209 1,843 Average annual growth, 1990-94 Populabon (%) 0.0 0.5 1.4 Labor force (%, Russia: 1992-95) -0.9 .. 1.6 GNP Gross Most recent esUmate (latest year available since 1989) per enrollment capita erlmn Poverty: headcount index (% of population) 32 Urban population (% of total population) 73 64 54 Life expectancy at birth (years) 65 89 67 lnfant mortality (per 1,000 liv bvrths) 18 19 35 Child malnutrition (% of children under 5) Access to safe water Access to safe water (% of population) .. .. 78 Illiteracy (% of population age 15+) 0 Gross primary enrollment (% of school-age population) 82 97 104 Male .. 97 105 -Russian Federation Female .. 97 101 Lower-middle-income group KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1975 1985 1994 1995 Economic ratos- GDP (billions US$) .. .. 277.1 363.7 Gross domestic investmenVGDP ., 28.9 28.0 Openness of economy Exports of goods & non-factor services/GDP .. .. 27.8 24.7 Gross domestic savings/GDP .. .. 31.7 30.7 Gross nabonal savings/GOP ., .. 30.1 29.3 Current account balance/GDP .. .. 1.2 1.3 Interest payments/GDP a) .. .. 1.8 1.7 I t Total debt/GDP ., .. 44.1 33.1 Savings Investment Total debt service/exports a) b) .. .. 26.1 20.1 Present value of debtGDP .. Present value of debtVexports ., 1975-84 1985-95 1994 1995 199644 Indebtedness (average annual growth) GDP .. .. -12.6 4.0 5.1 -Russian Federation GNP per capita .. -12.6 -4.3 5.4 Lower-middle-income gmup Exports of goods and nfs .. .. 11.8 3.6 4.8 STRUCTURE of the ECONOMY (% of GDP) 1975 1985 1994 1995 [Growth ntes of output and Investmentt%) Agnculture .. .. 7.8 9.4 l20 Industry .. .. 34.8 33.9 lot Manufacturing .. .. .. Services .. .. 57.4 56.7 -* Private consumption .. .. 47.4 .. . General government consumption .. .. 20.9 . Imports of goods and non-factor services .. .. 25.0 22.0 -ODI G F 197544 1985-95 1994 1995 (average annual g90wth) Growth ntes of export and Imports (%) Agnculture .. .. -9.0 . Industry .. .. -18.6 25 Manufacturing .. Services -10.0 o Private consumpton .. Total consumption .. .. 2.2 -2.8 .2S Gross domestic investment .. .. -33.1 -4.5 1 Imports of goods and non-factor services .. .. 22.0 7.1 Gross national product .. .. -12.7 -4.4 -Exporta -imports Note: 1995 data are preliminary estimates. The diamonds show four key indic4tors in the country (in bold) compared with its income-group average. If data are missing, the diamond will be incomplete. a) Scheduled payments before debt relief. b) Exports of goods and services. -77 - Schedule B Page 2 of 2 Russian Federation PRICES and GOVERNMENT FINANCE 1975 1985 1994 1995 Inflation I%) Domestic prices (% change) 2 Consumer prices 303.2 189.2 1500 Implicit GDP deflator 307.6 182.8 1oo0 Government finance soo (% of GDP) Current revenue 37.7 29 8 o _ Current budget balance 90 o, 92 93 94 95 Overall surplus/deficit -10.0 -4.8 -GGDPdef. - CPI TRADE 1975 1985 1994 1995 Exportandimportlevels(mill US$) (millions USS) Total exports (fob) 69,600 78,500 -2w0 . Petroleum, crude and processed 16,454 18.162 1 T Natural gas 12,632 13,834 175.000 t Manufactures 15 j Total imports (fob) 55,200 60,600 15000_ Food . ..75, Fuel and energy KM. . . 00 Capital goads . ..25,000 Export price index (1987=100) B.o 9 91 9 0 3 9 Import prce index (1987= 100) ,9 Terms of trade (1987 100) .. .. .. .. oExports alrmports BALANCE of PAYMENTS 1975 1985 1994 1995 (millions USS) Curnt account balance to GOP raUo 1%) Exports of goods and non-factor services 77,100 89,900 3 - Imports of goods and non-factor services 69,400 79,900 77 Resource balance 7,700 10,000 Net factor income -4,300 -5,400 Net current transfers -100 200 Current account balance, , before capital transfers 3,300 4,800 Financing items (net) . .. -7,200 600 Changes in net reserves 3,900 -5,400 89 90 91 92 93 94 95 Memo: Reserves including gold (mill. USS) .. .. 6,475 17,275 Market exchange rate (local/USS) .. .. 2,205 4,562 EXTERNAL DEBT and RESOURCE FLOWS 1975 1985 1993 1994 (millions US$) Composition of total debt, 1994 (mlil. US$) Total debt outstanding and disbursed c) 83,888 94,232 IBRD 367 684 G A C IDA 0 ° 8993 es4 4198 0 Total debt service paid 2,331 3,661 IBRD 12 38 IDA 0 0 Composition of net resource flows Capital transfers, net , 2,802 800 Official creditors . . . . E Private creditors F \ /45207 Foreign direct investment 386 600 34588 Portfolio equity , 0 -200 World Bank program Commitments , 700 600 A - IBRO E - Bilalarsi Disbursements 371 283 B-IDA D-Othermultilateral F-Private Pnncipal repayments 0 0 C-IMF G - Short-teml Net flows 371 283 Interest payments 12 38 Net transfers 360 245 Russia Country Operabons Division and Intematonal Economics Department m:\victoratable\aag\Rus47aag.xIs 5/13/96 Note: Estimates for economies of the former Soviet republics are subject to more than the usual range of uncertainty. 1995 data are preliminary estimates. c) Debt owed to the members of ex-CMEA is excluded. - 79 - Schedule C Page 1 of 1 RUSSIAN FEDERATION COAL SECTOR ADJUSTMENT LOAN TIMETABLE OF KEY PROJECT PROCESSING EVENTS Time taken to prepare 11 months Project prepared by Government with IBRD assistance First IBRD mission July 1995 Departure of appraisal mission May 1996 Negotiations May 1996 Planned date of effectiveness July 1996 List of relevant PCRs and PPARs Not applicable - 80 - Schedule D Page 1 of 2 STATUS OF BANK GROUP OPERATIONS IN RUSSIA A. STATEMENT OF BANK LOANS a (as of June 3, 1996) US$ Million Loan Fiscal (Less Cancellations) No. Year Borrower Proiect Loan Undisbursed Two fully disbursed loan 1200.00 0.0 Loans Under Disbursement: 35320 1993 Russia Employment services and Social Protection 60.00 46.51 35460 1993 Russia Privatization 90.00 64.51 36230 1993 Russia Oil Rehabilitation 604.77 407.93 37060 1994 Russia Highway Rehabilitation and Maintenance 300.00 248.04 37340 1994 Russia Financial Institutional Development 200.00 195.00 37560 1994 Russia Land Reform Implementation Support 80.00 78.49 37570 1994 Russia Agriculture Reform Implementation Support 240.00 238.69 37630 1994 Russia Enterprise Restructuring 200.00 200.00 37680 1994 Russia Oil Rehabilitation II 500.00 457.93 38060 1995 Russia Environment Management 110.00 106.04 38240 1995 Russia Management and Finance 40.00 36.78 38440 1995 Russia Portfolio Development 40.00 38.28 38500 1995 Russia Housing 400.00 396.81 38530 1995 Russia Tax Administration 16.80 16.45 38720 1995 Russia Emerg. Oil Spill. Mit 99.00 37.21 38760** 1995 Russia Gas Distribution and Energy 106.50 106.50 38850 1995 Russia Urban Transport 329.00 329.00 39610 * 1996 Russia Standards Development 24.00 24.00 39900 ** 1996 Russia Bridge Rehabilitation 350.00 350.00 40090 ** 1996 Russia Community Social Infra 200.00 200.00 40120 ** 1996 Russia Enterprise Housing Diveestiture 300.00 300.00 40290 ** 1996 Russia Capital Markets 89.00 89.00 Total 4394.30 3974.33 Of Which: Repaid 0.00 Total Now Held by the Bank 5570.07 Total Amount Sold 0.00 Of Which: Repaid 0.00 Total Undisbursed 3974.33 a/ The status of these projects is described in a separate report on all Bank/IDA financed projects in execution, which is updated twice yearly and circulated to the Executive Directors on April 30 and October 31. * Not yet effective. ** Not yet signed. -81 - Schedule D Page 2 of 2 B. STATEMENT OF IFC INVESTMENTS (As of April 30, 1996) FY FY Description Sector Loan Equity Other /a- Total Undisb Appr. Committed A. Aooroved and Committed (Sinned) Proiects 93 94 International Moscow Bank Financial Services 15.0 0.0 15.0 12.0 93 94 Polar Lights Mining & Extraction 60.0 0.0 60.0 0.0 94 94 Framlington Russ. Inv. Fund Financial Services 0.0 8.0 8.0 0.0 95 95 First NIS Regional Fund Financial Services 0.0 15.0 15.0 4.5 94 95 Russian Telecom Dev. Corp. Infrastructure 0.0 7.5 7.5 0.0 95 95 Nizhniy Newsprint Holding Timber, Pulp and Paper 30.0 11.0 45.0 86.0 20.2 95 95 National Registry Com Financial Services 0.0 1.5 1.5 0.6 95 95 Vasyugan Services Mining & Extraction 9.0 0.0 9.0 0.0 96 96 Alpha Cement Open Jt. Stock Cement & Construction 13.33 13.33 0.0 95 96 Dapsona Food & Agribusiness 6.8 0.0 6.8 5.3 95 96 Sector Capital Development Financial Services 0.0 0.47 0.47 0.13 95 96 Sector Capital Fund Financial Services 0.0 4.53 4.53 4.22 96 96 Russian Technology Fund Financial Services 0.0 2.00 2.00 1.50 96 96 Savvinskaya-Seiyo Company Indus & Cons Svcs 7.7 0.00 7.70 7.70 Total gross commitments 128.5 63.33 45.0 236.83 56.15 Less cancellations, terminations, repayment & sales 19.8 - - 19.80 - Total commitments now held 108.7 63.33 45.0 217.03 56.15 B. Approved Proiects Pending Commitment CTC Foods Food & Agribusiness 0.0 7.0 7.0 Volga Fund Financial Services 0.0 20.0 20.0 ICF/UNEXIM Financial Services 15.0 0.0 15.0 Svyazinvest Telecommunications 0.0 50.0 50.0 Total pending commitments 15.0 77.0 92.0 Total commitments held and pending 123.7 140.33 45.0 309.03 Total undisbursed commitments held and pending 29.0 10.95 16.2 56.15 /a Participants portion. MAP SECTION I IBRD 28004 RUSSIAN FEDERATION UNITED SlArES OF AMERICA COAL SECTOR ADJUSTMENT LOAN «-hI P--,de'po COAL, POWER, AND STEEL INDUSTRIES Se - - I7 MALOR COAL FLOWS GREATER THANMAOCALBSNFRCMUIT Ir 0nr . IDMILLION TLOFNoS I 1s921G>REArER T-AN PSUPPORT AND EMPLOYMENT PROGRAMS RAILROADS L MA.OR COAL MINES EET I ADINISTRATIE CENTERS FOR SELECTED TOWNS AND CITIES X HARD COAL ° pCOMmUNITY SUPPORT AND EMPLOYMENT 6 NATIONAL CAPITAL 4 EeD R H T BAROW COAL E PROGAMNSRATIVE CETR OIVERS COALM1- M OTHER FEDERAL ROADS ECONOMIC REGION ROUNDARIES P IP UNITED B 1 5 e 6ROWN COAL - OBLAST KRA, OR REPUBLIC BOUNDARIES KINGDOM HARD COAL -ELEC-ED SECONDARY ROADS AUTONOMOUS OBLAST OKRUG OR SIGNIFICANT PORTS REPUBLIC BOUNDARIES A IRON ORE g STEEL TOWNS 1 LOCAL - - INTERNATIONAL BOUNDARIES COAL FIRED POWER RLHNIS WITh NUSAULLEREIOA 92< CAPACITY OP I30 0MEGAWATTS OR GREATER 9 NATIONAL E 2 V NORWAY - IETHERLANUS (C SWEDEN - 21 r 0 GERMANY F I N l A N D J,f/ AfFdolokSEi rW. TsF I N L A Sr' : - -\ -' rojFINLAN ~ ' Tka V /KmsoL;O RUSSIAN ; ,Dk6Agad 9f oI,o >ESTONIA R *Khamo UPOLAND \I XLEL . &5'# ~ j | XU RA {NRHSVIO$t - - 7t@a ou TUNGARY 5 / R K E Y I TVOAIA. .4J* ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~~~u B ORA L z N 1HTro;rI, UKA < O RAIN E -D -5IA ' HID SL,akhMO NGO 00 40 60 0 IOMIR Fr B, SyktAkB,A- cL - ._ Eo A JAPAN @I~~~ flDRfU~~ phQ I ukg&Fk OGTLRWC. K '~tx~ *? 07 A4 X Yu",."",~~~~~~VL 47 ZOTWE '-L~a-zr - 4A~RY t~,1/~' F CHINA E.4Y-P.k 1: N.~~~~~~~~ ~ ~ ~~- 7o1o LMpLA KpiI ,d\ -,, ISLMICER K/7 .Er C H____I__N___A UVEAN N, OF IRA *,~~~K Z K5 TA 'SA'PP F" R