If everything is so rosy, why is the market going down? -Vi
MOSCOW, May 7 (Reuters) - Russia's new government on
Thursday forecast rising growth and falling inflation in an
upbeat economic outlook for the next three years.
A government meeting chaired by Prime Minister Sergei
Kiriyenko mapped out a budget plan until 2001 under which annual
economic growth would hit five percent and inflation would drop
to between 3.7 and 4.5 percent from about 12 percent in 1997.
First Deputy Finance Minister Vladimir Petrov told a news
briefing that Gross Domestic Product (GDP) was expected to grow
2.5 to 3.0 percent next year.
It rose 0.4 percent in 1997, the first year of officially
recorded growth since 1989. Output fell through the early 1990s,
accompanied by a general fall in living standards, during the
painful transition from communist central planning to the free
market.
President Boris Yeltsin sacked veteran premier Viktor
Chernomyrdin on March 23 and appointed Kiriyenko, a little-known
energy minister, to pursue reforms with more vigour.
Yeltsin and Kiriyenko started building the new government on
April 24 after the Communist-led parliament grudgingly approved
the Kremlin nominee rather than see the lower chamber dissolved.
Most of the new government is in place but some ministers
have yet to be named. Further appointments are likely after
Yeltsin meets Kiriyenko again on Friday.
Kiriyenko, 35, has said the frail economic growth seen last
year has effectively been halted due to lower oil prices and the
financial crisis in Asia, which translated into higher borrowing
costs for other developing countries like Russia.
Kiriyenko, whose government mixes a handful of fresh new
faces with the old guard, will also have to deal with growing
wage and pension arrears and an ineffective tax system.
"Unfortunately, there's a hole in the budget," Yeltsin told
reporters, saying the streamlined government would have to work
fast and run its finances in a way the public could understand.
The new team will have to work in a hostile environment as
the Communists, who dominate the lower house of parliament, have
vowed to move a no-confidence vote by the autumn.
The Yeltsin-drafted constitution makes it difficult for
parliament to oust the government. But the Communists want
revenge for the humiliation they suffered when Kiriyenko was
endorsed, and a confidence battle could hold up legislation.
Adding to the uncertainty about the new government's future,
Yeltsin signed a decree earlier this week under which his
presidential staff would no longer review cabinet decisions.
Formally, the decree was prompted by Yeltsin's desire to
enhance the authority of the new government and shrug off
opposition allegations that it was his "pocket cabinet".
In fact, the new system lets Yeltsin distance himself from
future clashes between the government and parliament -- and may
make it easier for him to turn against Kiriyenko.
As the new premier struggled to work out how to achieve the
steady economic growth demanded by Yeltsin, the Kremlin fought
media allegations that many key decisions, including the
government reshuffle, have been dictated by a small clique of
Yeltsin's aides rather than by the president himself.
Kremlin spokesman Sergei Yastrzhembsky told Mayak radio that
Yeltsin was firmly in control of political decision-making.
"It is not true that there is some narrow clan closed to
fresh ideas and proposals...which puts constant pressure on the
president. This is an invention...dreamt up by opposition
media," he said.
During Yeltsin's long illness following his re-election in
1996, Russian media speculated that Anatoly Chubais, then head
of the presidential administration, had assumed the role of
regent, effectively taking major decisions of state.
Yastrzhembsky denied this had ever been the case. Yeltsin
has made a strong political comeback since undergoing
life-saving heart surgery in November 1996, and Chubais was
sacked from the government in March. |
