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Economic Development Ministry opposes stopping advance payments for public contracts

September 03, 2013, 15:23 UTC+3

“This is a hopeless case for small businesses,” Deputy Economic Development Minister Yevgeny Yelin says

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MOSCOW, September 3 (Itar-Tass) - Russia’s Economic Development Ministry has criticised Finance Ministry proposals to stop making advance payments for work on public contracts, Deputy Economic Development Minister Yevgeny Yelin told reporters on Tuesday.

In its report on streamlining budget spending for 2014-2016, submitted to the presidential administration, the Finance Ministry sought to end payments "up front" when work is awarded.

“We cannot even imagine this,” Yelin said. “This is a hopeless case for small businesses.”

Deputy Head of the ministry’s contract system development department Dmitry Gotovstev warned that refusal to make advance payments might increase the prime cost of fulfilling contracts and threaten their non-completion.

“Complete refusal of advance payments may lead to physical non-fulfillment of contracts, especially large ones,” he said. “When there are no advance payments, a supplier would have to take loans, increasing the prime cost.”

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