Publication: Monitor Volume: 3 Issue: 80

The Russian Duma is preparing a hostile reception for government plans to revise the 1997 budget. First Deputy Prime Minister Anatoly Chubais will present to a government meeting on 25 April a plan to boost tax receipts by 30 trillion rubles and to cut federal spending by 70 trillion rubles (about 15 percent of total spending). Chubais told a banking conference on April 22 that "We should be talking not about sequestering the budget, but about sequestering empty promises, and lies, which have dominated the budget process." (ORT, April 22) Izvestiya was more skeptical, suggesting that the budget cuts will take place "under the anesthesia of Chubais’s promises to raise additional income," with the latter unlikely to materialize. (Izvestiya, April 23)

Chubais also said that ministry chiefs who refuse to accept the reduced spending limits will be forced to resign. However, as Aleksandr Minkin has noted, in the past month Russia has seen an unprecedented phenomenon — more than a dozen people have declined invitations to become ministers, sensing that their hands will be tied. (Novaya Gazeta, April 21)

Duma speaker Gennady Seleznev complains that, apart from Prime Minister Viktor Chernomyrdin, no other government ministers have approached Duma representatives for talks. In interviews on April 22 he warned that "We will not allow the budget to be destroyed," and said that talk of cutting 100 trillion rubles is "only a joke" (RTR, Ekho Moskvy, April 22) Even Grigory Yavlinsky — the leader of the only faction to vote against the original 1997 budget, said that the "government is practically out of control," and argued that rather than sequestering funds a completely new budget needs to be drawn up for the second half of the year. Under the budget law, the government should have sent its sequestration proposals to the Duma by April 20, given the shortfall of revenue in the first quarter, but it has not yet done so.

Government spokesmen continue to downplay the seriousness of the situation. First Deputy Finance Minister Vladimir Petrov said that the budget crisis will not spill over into a general economic crisis (Ekho Moskvy, April 22), although it is hard to see how efforts to correct a 100 trillion ruble shortfall cannot have a broader macroeconomic impact. The government argues that the new draft tax code (which it has now finished preparing) and efforts to regulate the monopolies will tackle the long term problems which have caused the budget crisis. Aleksandr Livshits, now deputy head of the presidential administration, candidly explained that the budget had been drafted in a great hurry last August — just one week after he was appointed finance minister — "in order to win the confidence of other countries," and not because the government was confident that its provisions could be realized. (Izvestiya, April 23) The impression remains that government policy is driven by crisis management, and that its policy horizon is measured in weeks rather than months.

Chernomyrdin Mutes NATO Issue in Visit to Czech Republic.