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Strategies & Market Trends : Investment in Russia and Eastern Europe -- Ignore unavailable to you. Want to Upgrade?

To: djane who wrote (353)	7/17/1998 2:33:00 PM
From: djane	Read Replies (1) \| Respond to of 1301

Vi, Russian govt to use decrees/orders to make up budget gaps left by Duma. What do you think? In one article I posted, they referred to it as "political theater," implying that the Duma had done just enough to leave the tough decisions for Yeltsin to take the heat. PM Says Duma Has Not Done Enough Updated Friday, July 17, 1998 at: NYC 11:35 a.m. London 4:35 p.m. Prague 5:35 p.m. Moscow 7:35 p.m. MOSCOW -- (Reuters) Russian Prime Minister Sergei Kiriyenko told the Duma on Friday that it had gutted the government's anti-crisis plan by approving measures raising only a third of targeted revenues. The government would use orders and presidential decrees where possible to make up gaps, he said, and asked the Duma to authorize the government to change current tax rates by 10 percent. But the Duma went into its summer recess without considering Kiriyenko's new proposal and leaving the government in a precarious position. It has agreed $22.6 billion in new credits from the International Monetary Fund, World Bank and Japan which are partly linked to passage of the anti-crisis plan. Finance Minister Mikhail Zadornov told the Federation Council upper chamber that the government would ask the Duma to hold another extraordinary session before the autumn to consider additional anti-crisis measures. Kiriyenko told the Duma that the federal and regional budgets combined could only raise 28.2 billion rubles ($4.5 billion) of a planned 102 billion rubles after the Duma changed and rejected key parts of the government package. The federal government would only get 3.1 billion rubles of a planned 71 billion. "Therefore I can state that we will not be able to solve the problem of filling budget gaps," he said. "We will do what we can with presidential decrees and government orders." Kiriyenko told reporters he had a government order to levy a unified Value Added Tax, rejected by the Duma, lying on his desk, which he might use. Russia's constitution limits the government's ability to change taxes, which come under the jurisdiction of parliament. The board of the International Monetary Fund (IMF) meets on July 20 to approve the first $6 billion tranche of the huge funding package. But the IMF's agreement is at least partly conditional on Duma approval of the government's austerity measures and it was not clear if the laws passed by the Duma would satisfy the IMF. A government source told Interfax news agency the chances of the first tranche being approved were 90 percent. Even if approved, the first tranche would go to beef up the reserves of the central bank and to prop up the ruble currency. This will leave the government with effectively the same budget problems as before the deal with the IMF and Kiriyenko's remarks appeared to reflect this. He said foreign loans would help overcome the crisis only if the state managed to balance its expenditure and revenues. On a more optimistic note for the government, the Federation Council quickly passed on Friday the anti-crisis measures which had been approved earlier by the Duma. Major legislation passed by the Council and ready for President Boris Yeltsin's signature include an optional sales tax for regions to levy up to five percent on luxury goods and a state monopoly on alcohol production. The chamber also passed a cut in oil excise tax to 25 rubles per tonne from 55 rubles per tonne. ( (c) 1998 Reuters) Russia Today is a service of EIN Inc., and has no liability for content except as set forth in Terms & Conditions. Copyright 1995, 1996 EIN Inc. All rights reserved.