DUMA PREPARES TO TAKE SECOND VOTE ON BUDGET.

The State Duma is set today to take the second of four expected votes on the Primakov government’s draft 1999 budget. First Deputy Prime Minister Yuri Maslyukov, Finance Minister Mikhail Zadornov and Economics Minister Andrei Shapovalyants are expected to take part in today’s debate in the Duma on the draft. Last week the Duma’s budget committee called for the passage of the draft, but urged that some money be taken from allocations for state management and international activities, then re-allocated to national defense, industry and the regions. While opposition parties, including the KPRF, have sharply criticized the budget, they are expected to approve the version presented in today’s second reading. Grigory Yavlinsky, however, said yesterday that his Yabloko faction would vote against the existing version. Yavlinsky said the draft “already does not correspond to the financial-economic realities of the country and the projections of the government for this year.” The draft assumes inflation will run at 30 percent this year, and that the exchange rate will average 21 rubles to the dollar. Inflation is already higher, and the ruble is already weaker.

International lending institutions, including the International Monetary Fund (IMF) and the World Bank, have already indicated that renewed aid to Russia will be contingent on a realistic budget. Aleksandr Zhukov, head of the Duma’s budget committee, said yesterday that Russia will not be able to meet the IMF’s demand for a four percent budget surplus this year. The IMF has criticized the government’s decision to cut both the profit tax and the value-added tax. The government, meanwhile, has continued to grant credits to insolvent commercial banks, while owing state workers more than 80 billion rubles (more than US$3.6 billion). in back wages.

Nevertheless, top Russian government officials believe–or, at any rate, are acting as if they believe–that the IMF will agree, at least, to refinance Russia’s debts. Russia is supposed to pay back US$17.5 billion this year, mostly to the IMF and the holders of Eurobonds. In a newspaper article published today, Maslyukov, who met last week in Washington with the heads of the IMF and World Bank, wrote: “In general, I am convinced that the issue of refinancing our debt to the IMF (and we are not asking for anything else from the fund) will be solved without scandal, on a civilized basis. Not only is Russia interested in this, but, as I was again convinced in Washington, so are the U.S. administration and international financial institutions” (Trud, January 19).

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