Russian Duma Approves '97 Budget



Russian State Duma
From: Zhiwriter

December 15, 1996
Russian Opposition Cautiously Backs '97 Budget
By Oleg Shchedrov

MOSCOW, Dec 15 (Reuter) - Russian communists and their allies in the lower house of parliament, in a major change of tack, on Sunday dropped their opposition to the 1997 draft budget.

"The style of work characterised by confrontation with the executive power does not take us anywhere. We need to change our style," said Yury Maslyukov, a leading communist and chairman of the Duma committee for economic policy.

He called for the State Duma (lower house) to vote for the budget.

Maslyukov's comment was a dramatic change from the communist line on December 6, the previous day of the parliamentary budget debate, when party leaders called for the plan to be rejected.

"Our main task now is to pass this digusting budget with one aim in mind -- to maintain stability in society," said Nikolai Kharitonov, leader of the conservative Agrarian Party faction.

But Communist Party leader Gennady Zyuganov told parliament that communists reserved the right to block the budget in later readings if certain conditions, such as creating a programme for industrial growth and payment of back wages, were not met.

He also called on President Boris Yeltsin, recovering from a major heart operation, to sack Anatoly Chubais, Kremlin's chief of staff and a hate figure for the opposition which says he has amassed unlimited power during Yeltsin's illness.

The draft has to pass three readings in the Duma before being submitted to the upper chamber, the Federation Council.

Communists and their allies hold a majority in the Duma, which is expected to vote on the draft later on Sunday.

Prime Minister Viktor Chernomyrdin, who is to address parliament before it votes, has promised to pay most government debts and create an investment fund.

Chernomyrdin, who celebrated four years at his post on Saturday, received a boost on Friday from the International Monetary Fund which decided to renew monthly payouts of a $10 billion loan to Russia.

The IMF gave the go-ahead for the release of roughly $336 million, citing "improved revenue performance." It had previously criticised Russia's tax collection record.

Grigory Yavlinsky, head of the liberal opposition Yabloko group, said Yabloko would continue to oppose the government's spending plan, the only major Duma party left doing so.

Russian Finance Minister Alexander Livshits opened discussion of the 1997 draft budget on Sunday with a promise of money for regional administrations.

"We have managed to increase transfers to the regions by four trillion roubles ($720 million) in 1997," Livshits told the Duma, which has rejected the budget once before.

Livshits said the plan envisaged a deficit of 3.5 percent of gross domestic product.

The target deficit had been widened from the government's initial proposal of 3.3 percent and Chernomyrdin said a further widening of the gap could be damaging.

The Russian government has championed a tight monetary policy which has led to a steep fall in the rate of inflation, from near 20 percent in January 1995 to 1.9 percent in November.

The squeeze has brought misery for millions of workers, who have not been paid for months by cash-strapped firms. Tax revenue, in turn, is well below target.

Chernomyrdin has said that if budget targets were met and 1997 inflation did not exceed 11-12 percent, the economy could grow by two percent. GDP fell six percent in real terms in the first 11 months of this year from January-November 1995



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