President Yeltsin’s economic adviser Aleksandr Livshits says the new Russian government will not see controlling inflation as an end in itself and will shift its priorities to concentrate on investment and growth. Outlining the government’s new economic strategy at a press conference yesterday, Livshits praised the government’s achievement in bringing inflation down from the Weimar-type levels recorded in the first years of the reform, and said the time had come to capitalize on this success.
Livshits discounted the dire warnings from the commercial banks of the threat of a banking crisis in Russia. He said the Central Bank has the situation under control and will take the necessary preventative measures. He dismissed the difficulties of the bankrupt Tver Universal Bank as an exception, not the symptom of a more pervasive problem. At the same time, Livshits concurred with those who have warned that economic growth is still some way off and will begin slowly. Livshits said he does not expect economic growth in the coming six to ten months. He said foreign investors, who were originally put off by the danger of a Communist government, are now waiting to see whether Yeltsin’s health will allow him to remain in power for another four years. Livshits predicted that, as a result, investment will pick up only in 1997 and output will begin to grow only after that. He said he expected a monthly inflation rate in the range of 1.5 to 2 percent until the end of the year.
Livshits said Prime Minister Viktor Chernomyrdin will officially unveil the new economic strategy within a few days. He said the new government will make tax collecting its top priority and that a presidential decree has been drafted that will abolish all tax exemptions and privileges, stiffen penalties for tax evasion, and reward firms that pay their taxes on time. Prices for utilities will be hiked in the fall and the government will also adopt unspecified retaliatory measures against discrimination against Russian goods on foreign markets. (Interfax, RTR, July 9)
Russia Begins New Offensive in Chechnya.