PALERMO - Russian Finance Minister Alexei Kudrin failed Saturday to soften the demands of Group of Seven nations for Moscow to fully face up to its debt commitments.
Kudrin had tried to pursuade G7 finance ministers of Moscow's determination to live up to its obligations.
But the final G7 statement was tough.
"We strongly urge the Russian authorities to step up the process of economic reforms and meet in full their financial obligations in order to restore promptly normal relations with the international community," it said.
US Treasury Secretary Paul O'Neill noted the G7 statement and urged Russia to implement reforms.
"As they face the task of reform, we underscored the importance of creating the policy, regulatory and legal infrastructure necessary to make market economies work," he said.
"We also urged Russia to move quickly to take action against money laundering."
Kudrin earlier told the ministers from Italy and France that the Russian parliament would examine a budget that incorporates the debt payments at the end of this month or early March.
"We have had assurances on the debt payment," said an Italian treasry official.
The Russian minister also raised the debt with O'Neill.
Kudrin "was explaining the situation of approving a new version of the Russian budget (for 2001), which will include payments of the Paris Club debt," a Russian source told AFP.
In 2001, Russia would pay 3.5 billion dollars on its debt, "a big amount for Russia," the source said. "But we need to know what the oil price will be, which has a strong influence on the Russian budget."
Under the new budget plan for 2003, the Russian government would pay off 18 billion dollars, he said, although the figure could also be adapted depending on the price of oil, a major export.
O'Neill, who was at his first G7 meeting, had sent a letter to Kudrin this week saying there was no point in rescheduling the debt, arguing it would only postpone dealing with the problem.
The new US treasury secretary had met with Kudrin several times before when he travelled to Moscow as an investor as chief executive of Alcoa, the Russian source said.
On January 1, Russia's debt to the Paris Club of international creditors stood at 48.3 billion dollars (53.3 billion euros), of which 38.7 billion dollars are Soviet-era obligations.
Russia's embattled government suffered a double blow Friday when the IMF refused to strike a new cooperation agreement and the country's parliament knocked down a vital Western debt repayment deal.
The International Monetary Fund mission left Moscow without sealing a cooperation pact instrumental to Russia's efforts to delay payment on its overwhelming Soviet-era debts.
The State Duma (lower house) budget committee also refused to back the government's proposal to allocate almost all extra budget revenues to debt servicing.
The Duma instead ruled that the bulk of the Western debt would have to be restructured somehow, but that it should not be covered in the budget at the expense of ordinary Russians.
The Russian government has until next Thursday to decide whether to present its own or the Duma committee's version of the revised budget for a full vote.
Russia needs to win the IMF's approval before launching direct talks with the Paris Club on payments that have been under dispute for months as Moscow remains unwilling to face up to its Soviet-era obligations.