Analysts believe that the Finance Ministry will be able to implement its borrowing program. "It is quite possible to place bonds for 290 billion rubles, there will be demand," says Nikolai Kashcheyev, chief specialist at the investment bank Trust. In his opinion, banks have plenty of money (daily balances on correspondent accounts and deposits with the Central Bank are about 500 billion rubles) and even a decrease in liquidity is unlikely to change the mood of investors much. Mikhail Avtukhov, head of the debt instruments department at Ingosstrakh-Soyuz Bank, draws attention to the continuing strengthening of the ruble, in which case the purchase of government securities while simultaneously hedging currency risk becomes very profitable. "Speculative demand from non-residents is also increasing on the market," he says. Avtukhov believes that the Finance Ministry will be able to sell the declared volume of government securities without much difficulty, it is only necessary to choose the right moments (for example, the re-election of Vladimir Putin as president or the assignment of an investment rating to Russia by yet another international agency).

The government may sharply expand domestic borrowing. Analysts consider the plan to attract more than 140 billion rubles from the market to be realistic, but advise the Finance Ministry to sell securities to a wide range of investors, and not just to Sberbank and the Pension Fund.

Tomorrow, the government will approve the volume of borrowings on the domestic market in 2004 at its meeting. According to a source in the White House, the final parameters are unlikely to differ much from the Finance Ministry's proposals, which are at the disposal of Vedomosti. However, today, Prime Minister Mikhail Kasyanov will still discuss them with his deputy, Finance Minister Alexei Kudrin, the source says.

The Finance Ministry's appetite has grown sharply compared to last year. The Finance Ministry proposes to place government securities in 2004 for 291 billion rubles (GKO - 41 billion rubles, OFZ - 220 billion rubles, GSO - 30 billion rubles). At the same time, bonds for an exchange for non-market government securities from the Bank of Russia portfolio will be issued for another 70 billion rubles. The Finance Ministry plans to earn 259 billion rubles by selling government bonds, so that when redeeming securities for 118 billion rubles, the "net attraction" will reach 141 billion rubles compared to 9 billion rubles in 2003.

Today, in the structure of the state debt, internal borrowings make up 15%, external - 85%, states the head of the department of issuing state securities of the Ministry of Finance, Alexander Shcherbakov. The government's debt strategy envisages that by 2006 this proportion will change to 25/75. "The substitution is ongoing and will continue," the official explains.

"The Ministry of Finance needs to place government securities on the market, and not arrange a get-together with the Pension Fund and Sberbank," warns Boris Ginzburg, senior analyst at NIKoil. "The seller must set the price taking into account the opinion of buyers." In his opinion, the market placement of government securities will benefit investors: "Government bonds can become a stabilizer for the money market and a benchmark for the cost of borrowing."

But not all experts think so. Andrey Cherepanov, Chairman of the Moscow International Currency Association, who previously headed departments of the Central Bank and the Ministry of Finance, is surprised by the "stubborn desire of the Ministry of Finance to resort to loans, despite additional budget revenues." In his opinion, borrowing should be done exclusively to cover ultra-short-term cash gaps. "The placement of long-term bonds takes money out of the economy, and the budget bears a huge burden of paying interest," says Cherepanov.

The Finance Ministry's materials for the government meeting say that the GKO-OFZ bonds worth 30 billion rubles are intended for the Pension Fund. According to the law, the Pension Fund's savings in 2004 will amount to 80.8 billion rubles, half of which will be invested in ruble securities. But 40 billion rubles invested in the GKO-OFZ market will worsen its liquidity, since the Pension Fund is a passive investor and holds the securities until maturity. Therefore, according to the Finance Ministry's plan, the Pension Fund should buy GKOs. "The demand for GKOs from private managers will be minimal - too few pension savings have been transferred to them," Avtukhov notes. "Therefore, the Finance Ministry's decision is quite reasonable." The coupon rate on GKOs will no longer be tied to inflation. "Tying the GKO coupon to inflation increased the budget's risks in terms of debt servicing. It is simpler with a fixed coupon - this makes it easier to forecast treasury expenses," explains Shcherbakov from the Finance Ministry. According to him, the rate will be set similarly to the fixed coupon on OFZ.

The Ministry of Finance will borrow 141 billion rubles.