RUSSIAN PARLIAMENT REACHES COMPROMISE OVER CENTRAL BANK’S PROFITS.

A newly adopted law requires the Central Bank of Russia (CBR) to remit to the federal budget 50 percent of its net profits for any given year. (Finansovye izvestiya, July 18) Originally, the government insisted that the CBR should remit 70 percent of its profits to the treasury, whereas the CBR was unwilling to cede more than 30 percent. (Segodnya, July 16) The compromise that parliament has now reached will enable the government to get on with drafting next year’s budget, knowing what revenues it can expect to receive from the CBR, while the CBR should in future be protected against unexpected assaults by the government on its funds. The question has become acute because of the pressures on the federal budget caused by shortfalls in tax revenue. Only last month, the Central Bank and the Russian government got into an open fight when parliament ordered the CBR to hand its 1994 profits over to the treasury. By raiding the CBR’s profits, the government seemed to be looking for a way of getting round the IMF’s requirement that the government not borrow directly from the CBR. This is one way in which the Russian government may be said in recent months to have infringed the spirit if not the letter of the conditions Russia accepted in return for the IMF’s $10.2 billion extended fund facility loan in March of this year.

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