President Boris Yeltsin’s aides are said to have spent the weekend frantically revising the text of the annual state-of-the-nation address that Yeltsin is due to deliver to parliament tomorrow. Yeltsin is said to have been dissatisfied with the existing text and to have returned it for reworking. (Russian TV, February 13) His words will be keenly monitored for any indication of the future of Russia’s economic reforms.
Late last week, First Deputy Premier Anatoly Chubais said the government may also seek last-minute revisions to the 1998 draft budget, which is due to receive its fourth and final reading in the Duma later this week. Chubais told a TV interview that, whereas the revenue and spending targets outlined in the draft looked "difficult but possible" to attain when the 1998 budget was being drafted late last year, today those targets look far harder to meet. (Russian Television, February 13) The draft as approved in the third reading on February 5 called for economic growth of 2 percent, but the Economy Ministry has already downgraded its prediction to 1.2 percent. Chubais blamed Asia’s financial crisis for forcing Russia to raise interest rates in order to protect the ruble. The problem is that high interest rates will force Russia’s heavily borrowing government to spend far more on servicing domestic debt than the 25 percent average interest rate it originally foresaw. Last week, the government was having to pay 35 percent for its money. (The Economist, February 14) Sustained high interest rates will make it much harder for the government to finance its budget deficit and choke off any incipient revival of investment that might have occurred this year.
Russia’s Communist Party Edges Toward the Center.