Publication: Monitor Volume: 1 Issue: 64

Having failedto raise anything like what was expected from privatization sofar this year, or to hold inflation at projected levels, the Russiangovernment is scrambling to find new funds to keep the budgetdeficit financed by non-inflationary means. Finance minister VladimirPanskov told Russian television July 31 that Moscow might taxthe oil and gas industry more heavily and might seek to forcea reduction in the amount of money government enterprises traditionallyretain for wage funds. Both of these steps could cause problems:taxing the oil and gas industry could spark a political conflictwithin the government, given Premier Viktor Chernomyrdin’s linksto that sector, and reducing money held for wages could exacerbatethe already serious situation in which many workers are not receivingtheir wages. Moreover, Panskov warned that Russia would have toavoid the traditional fall spending spree that has send inflationback up at the end of the last three years.

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