CENTRAL BANK TO TAKE LEGAL ACTION.

The Russian Central Bank says it will appeal all the way to the Constitutional Court against an order to transfer five trillion rubles (nearly $1 billion) from its profits to the federal government. The order was pushed through parliament last week by President Yeltsin, who needs the money to finance his election promises. Central Bank chairman Sergei Dubinin said the Bank had obeyed the order and transferred the money to the federal budget on June 9, but called Yeltsin’s move an attack on the constitutionally-guaranteed independence of the Central Bank. (Itar-Tass, June 10) Dubinin said the payment is equivalent to printing money. The Bank has repeatedly warned the government that such moves are inflationary and could jeopardize Russia’s $10 billion loan with the IMF, which strictly forbids direct bank financing of the budget deficit. IMF officials have expressed concern that Yeltsin’s challenge to the independence of the Central Bank will undermine Russia’s fragile economic stability and prove a dangerous precedent not only for a future communist president but also for a potential second Yeltsin term.

Yeltsin Spending Spree Continues.