CHUBAIS WARNS OF BUDGET CRISIS.
Publication: Monitor Volume: 3 Issue: 77
Russian first deputy premier Anatoly Chubais told the upper house of the Russian parliament yesterday that Russia faces a "monstrous" budget crisis that threatens the viability of the state. He said proposals to revise the budget and slash government spending will be presented to parliament later this month. Otherwise, he said, the state could cease to function. (NTV, April 17)
According to Chubais, the budget exceeds the ability of the state to pay by 100,000 billion rubles ($17.4 billion). Revenue targets were met by only 56.6 percent while taxes brought in only 39 percent of planned income in the first quarter of the year. Russia’s budget law states that, whenever income falls more than 10 percent below budget for a given quarter, the government must submit budget-cutting measures — known as sequestration — to the Duma for approval. Chubais said that this was now about to happen for the first time. He also warned that some of Russia’s largest enterprises, which owe huge amounts of unpaid taxes, will face bankruptcy proceedings if they do not pay up. Heading the list at the moment, he said, is the AvtoVAZ car-maker. Chubais said debtor-enterprises "will be invited to make a voluntary secondary share issue. That packet of shares will be lodged with the State Property Fund. Then the state will approve a schedule for discharging the debt, which will be monitored at 10-day intervals." Chubais said the government will also sell property and precious metals to raise additional funds.
Chubais’ tough talk seemed aimed at preparing the population for belt-tightening measures. He said the government plans to introduce means-testing for family support payments, but insisted that pension arrears will be paid as promised by July 1 and transfer debts to regions will be fully paid by the end of 1997.
The Duma, unimpressed, called on the government yesterday to print money to cover the budget deficit and pressed ahead with the preparation of legislation to denationalize some of Russia’s largest privatized industries. (Itar-Tass, April 17)
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