I don't think 100% rates are sustainable in the long run. However,
we'll see how the crisis is resolved. I'm impressed with the current
government - they are trying the best they can. This article
says that Russia GDP declined 0.2% in the first 5 months.
This is amazing considering 40% fall in oil prices. If you take
longer-term view and look at GDP decline/growth within the last
five years, a decline this year is within the errorbar of
a trend of gradual improvement.
MOSCOW (AP) -- Russia's prime minister beseeched parliament
Wednesday to approve the Kremlin's economic rescue plan, warning
that the economy has lost much of the little ground it gained and
is again on the decline.
But lawmakers in the opposition-dominated parliament made clear
they lack confidence in President Boris Yeltsin and would not
rubber-stamp his administration's proposals.
''This government's course is bankrupt,'' said Communist Party
chief Gennady Zyuganov, head of parliament's largest faction. ''We
must either change it or the end is very close.''
In an address to lawmakers, Prime Minister Sergei Kiriyenko laid
out the economy's troubles in stark terms: Gross domestic product
has declined 0.2 percent in the first five months of this year,
eroding the modest 0.8 percent gain posted last year -- the first
since the Soviet collapse.
Kiriyenko urged lawmakers to swiftly pass a package of 26 bills
the administration has compiled to trim spending, increase revenue
and win a new loan of at least $10 billion from the International
Monetary Fund.
The economy is sinking too rapidly to indulge in ideological
debates, Kiriyenko warned.
''The suggested measures are not political ones,'' he said.
''They are necessary for every political party. It is clear what we
need to do.''
The lower house, the Duma, set to work on several of the
proposals, giving preliminary approval to a measure to simplify tax
rates for small businesses.
But lawmakers from a range of factions said they will pick and
choose among the bills, amending those to which they object.
''We won't accept the majority of rigid measures the government
insists on,'' said ultranationalist Vladimir Zhirinovsky, head of
parliament's third-largest faction.
Communists and the other hard-liners who dominate parliament
have consistently opposed spending cuts, arguing that the
government should spend more to help struggling individuals and
industries.
The government's chronic inability to collect taxes has meant
that millions of Russians get their wages months late. The
government threatened on Wednesday to cut oil companies' access to
export pipelines and set deadlines for a number of other fuel and
metal firms to pay their overdue taxes.
Zyuganov said his party is likely to support only a portion of
the government's proposals: those that lower tax rates and assist
industry. Even the pro-government Our Home is Russia bloc said it
was likely to approve the bills only if they were amended.
The parliament has a pattern of rhetorically opposing Yeltsin
but giving in to his pressures at the last minute. Moreover, many
of the measures already have been implemented by presidential
decree.
All the same, the negative reception was unlikely to calm
Russia's skittish stock market, which has lost half its value since
the beginning of the year and has been dropping fairly steadily for
the past two months.
The pattern continued Wednesday, with the stock market closing
about 4 percent lower. The ruble also dropped to 6.24 to the
dollar, down from 6.23 on Tuesday.
Gary Kinsey, a trader at Brunswick Warburg brokerage in Moscow,
said the markets are convinced the key to a Russian recovery will
be a new IMF loan.
The government says it needs at least $10 billion to shore up
the Central Bank's reserves, strained by the effort of supporting
the ruble.
If the ruble is devalued, the Kremlin fears higher prices could
cause political unrest at a time when many Russians already are fed
up with waiting for paychecks.
In the latest protest about late pay, coal miners were reported
Wednesday to have gathered near railroads and highways in three
towns in the Kemerovo region of central Siberia.
The miners say the government has failed to live up to promises
made after they blocked rails for two weeks in May, the ITAR-Tass
news agency reported. |
