Publication: Monitor Volume: 4 Issue: 202

The Russian government approved its long-awaited anticrisis plan on Saturday (October 31), just one day after an IMF mission left Moscow without agreeing to release any of the US$4.3 billion installment slated as a second installment of a multibillion-dollar bailout package. Russian agencies quoted a Russian government expert as saying that the IMF viewed the anticrisis plan as a “significant step backward in forming a market economy.” Yevgeny Primakov, meanwhile, was unapologetic, saying that Russia, while hoping for IMF assistance in the future, would continue without the tranche. The Russian prime minister reiterated that the state would take a greater role in regulating the economy, saying: “Especially when one is coming out of a crisis situation… there is a special need to strengthen the regulatory role of the state.” That role, he said, should be to “bring about economic order” (Russian agencies, October 31).

One cabinet minister said this weekend that Russia had been printing money to meet its obligations, while a liberal newspaper predicted that the spending policies of the Primakov government would lead to hyperinflation. Finance Minister Mikhail Zadornov was quoted by the RIA-Novosti news agency yesterday as saying that the government had paid its salaries to state workers–including members of the armed forces–in October, but admitted that the state had printed additional rubles to do so. Zadornov said, however, that the emission had been minimal. Zadornov said last month that the government would print no more than 20 billion additional rubles–about US$1.2 billion by current exchange rates–to meet its obligations (Russian agencies, November 1). “Izvestia,” however, warned this weekend that the ruble print run would be much more significant. The newspaper reported that the 20-billion-ruble figure for the money emission was based on a projection that the government would manage to get 55.6 billion rubles in cash revenues, through taxes and other levies, in the fourth quarter of this year. “Izvestia” noted that only 13.6 billion rubles were collected in October. In all, the newspaper predicted, the government would end up printing an additional 79 billion rubles. Izvestia cited former Economics Minister Yakov Urinson as saying that in the first quarter of next year the ruble exchange rate would drop to 30-50 rubles to the dollar (Izvestia, October 31).

Aleksandr Livshits, a former finance minister and Yeltsin economic adviser, said yesterday that Russia’s period of liberal economic reforms was, for now, over. “In Russia everyone is tired of liberal reforms. The time has come for an objective breathing space,” Livshits told radio station Ekho Moskvy. “Now there is neither the political will nor the middle class… so that stage has come to an end.” Livshits also said Russia needed a “financial tsar” who would be in charge of the finance ministry, the Central Bank and the state tax services (Russian agencies, November 1).