On June 23 the Russian Duma was again unable to reach agreement on the government’s proposed 20 percent cut in the federal budget for 1997. By postponing its decision until the fall, the Duma left the government with the freedom — but also the responsibility — to cut the budget as it sees fit, in line with the flow of tax revenues. (RTR, June 23)
The government had originally filed a request to sequester 108 trillion rubles (about 20 percent of budget spending) on April 30. The Duma reacted with outrage, but repeatedly postponed discussion of the measure. On June 11 it agreed to set up a joint commission with government officials, but this failed to agree on a compromise variant. The Communists proposed cuts of 39 trillion rubles, while the government trimmed its request to 88 trillion rubles. Reluctant to shoulder the responsibility for further cuts in federal spending, the Duma on June 23 voted down both the Communist and government proposals.
June 23 also marked 99 days since Boris Nemtsov took over as first deputy prime minister. It is a new Russian tradition to evaluate a minister’s performance after 100 days in office, and Nemtsov gave a press conference in which he enumerated his achievements since April. They included the launching of housing reform, official income declarations, and steps to rein in the natural monopolies. (RTR, June 23)
The last few days saw a flurry of activity in the last of those three areas. On June 19 Yeltsin issued a decree ordering Gazprom to cut the rates it charges cash-paying industrial consumers by 40 percent, and the same day the railways announced a cut of 25 percent in freight charges for oil, 50 percent for coal and industrial products, and 40 percent for food. (Izvestia, June 20) On June 23 the Federal Energy Commission announced that electricity tariffs for industrial users would be cut by 30 percent from July 1. These are impressive numbers, but the catch is that the new low rates are only available for cash paying customers. Less than one in ten industrial customers of the utilities pay cash, so unless they suddenly uncover their hidden cash reserves and start paying on time, the reduced rates may turn out to be a largely cosmetic exercise for most industrial firms.
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