RUSSIAN GOVERNMENT REVISES GROWTH PROJECTION.

The Russiangovernment on June 3 announced a revised economic forecast for1997, which predicts that GDP will either remain static or fallby up to 2 percent this year. The government’s previous forecasthad predicted 0-2 percent growth this year. (Reuter, Interfax,June 3) The revised projection includes a 3 percent fall in industrialoutput and a 5 percent drop in agriculture, which will be offsetby growth in services and the unofficial economy.

The new projection envisions a GDP of 2,550-2,600 trillion rubles($440-450 billion), which is 130-180 trillion lower than the forecastbuilt into the original 1997 budget. The revised forecast willincrease the pressure on the government to find more budget cutsor ways to boost revenue. On June 3 the government submitted tothe Duma its plan to increase revenues by 30 trillion rubles ($5billion) this year. In an interview with Kommersant-dailythat same day, First Deputy Prime Minister Anatoly Chubais explainedthat the government’s efforts to boost budget revenue are focusingon major tax debtors like Gazprom (which owes the federalbudget 10 trillion rubles, of which 2.5 trillion have alreadybeen paid) and AvtoVAZ (which owes the federal budget 2.8trillion). This has been a familiar refrain in government policyfor most of the past year. Last October a special Temporary EmergencyCommission for Tax Collection was created, under the chairmanshipof Chubais and Chernomyrdin, in order to chase down the leadingtax deadbeats. The commission had only modest success, and haslargely slipped from public view.

In order to squeeze money out of major tax debtors, the governmentis now proposing actions such as freezing their hard currencyaccounts and stopping all budget payments to such companies. Oilcompanies with tax arrears will be barred from exporting. Thenew package includes a proposal to increase excise taxes on oiland alcohol, which would have to be passed into law by the StateDuma.

Duma Schedules Sequestration Debate.