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As part of elaborating a budget for 2001 and improving the investment climate, Mr Putin and Mr Kasyanov discussed plans for updating tax legislation with a view to removing discrepancies.

The finance minister reported progress in collecting taxes and budget revenues in the first months of the year.

They also considered possible additional government moves to strengthen the banking sector through enlisting the Agency for Restructuring Credit Institutions.

The acting head of state praised agreements reached with the London Club of creditors to write off part of the Soviet-era debt. Mr Kasyanov had conducted the negotiations. Mr Putin said that theoretically the Government could pretend it had nothing to do with the repayment of this $32 billion debt because Vneshekonombank was directly responsible. However, since it was a state-owned bank, the cabinet would never make believe that the problem was not its concern. He said Russia’s relations with foreign partners must be based on high moral and ethical principles. The Acting President stressed that if a state “swindles”, it loses the trust of partners both outside and inside the country.