Publication: Monitor Volume: 4 Issue: 209

According to leaks from Tuesday’s closed parliamentary session devoted to the government’s anticrisis economic plan, the cabinet, represented by First Deputy Prime Minister Yuri Maslyukov, made the case for a super-tight 1999 budget envisaging a 2 percent budget surplus. Such a budget would apparently win Russia US$4.5 billion in aid from the IMF and the European Bank for Reconstruction and Development. Maslyukov reportedly told the legislators that without such aid, annual inflation would reach 300 percent. This, he said, citing what might be seen as obvious, would cause big problems with external debt servicing and a sharp drop in living standards. With the aid, Russia is likely to see annual inflation of only 30 percent and no abrupt decline in living standards. Russian agency sources in the parliament called Maslyukov’s presentation a “joint statement” of the Russian government, Russia’s Central Bank and the IMF. Vladimir Ryzhkov, first deputy speaker of the Duma and a member of the Our Home is Russia faction, said that Tuesday’s Duma session meant that the 1999 budget will be very tough. One observer commented that the government was suggesting a budget so austere that even free-market icon Anatoly Chubais would not have dared suggest it (Russian agencies, November 10).

On the other hand, Maslyukov brought no budget numbers or draft bills with him to the Duma. Indeed, several key players said there was little point in presenting a budget for the upcoming year before the government comes to an agreement with foreign investors on restructuring the domestic debt it defaulted on last August. As Finance Minister Mikhail Zadornov noted, the government cannot present a budget before it knows how much it will have to reimburse the holders of frozen treasury bills. Aleksandr Shokhin, head of the Our Home is Russia faction in the Duma, predicted that the budget will not be passed until the middle of next year. Further, while the government of Prime Minister Yevgeny Primakov and the leftist majority in the Duma appeared to be getting along well on Tuesday, some observers predicted the romance would end when–and if–the government actually produced a tight budget and then asked legislators to approve it (Russian agencies, November 10).