RUSSIAN DUMA APPROVES 1997 DRAFT BUDGET.

Russia’s Communist-dominated Duma approved the first reading of the draft 1997 federal budget yesterday. (Interfax, December 15) This was the third time parliament had debated the budget in as many months, and adoption is a significant victory for the government. It increases the chances that the budget will be definitively approved, as the law requires, by the end of the year. Second and third readings are scheduled for December 25 — the day President Boris Yeltsin says he hopes to return to work in the Kremlin.

Revenues in the draft budget are set at 434.36 trillion rubles and expenditures at 529.76, leaving a deficit equivalent to 3.5 percent of Russian GDP. The budget envisages a two percent increase in GDP, which would make 1997 the first year of positive growth in Russia since it began the transition to a market economy. Both revenues and expenditures have been increased by 35 trillion rubles over the final amounts that had been approved earlier by Russia’s government-parliament conciliatory commission. The augmentation of planned revenues makes possible an increase in resources allocated to the Russian regions and to the agrarian and coal sectors, traditional recipients of state support. Russian prime minister Viktor Chernomyrdin pointed in particular to additional planned allocations of 5 trillion rubles for the agrarian sector and one trillion rubles for housing construction (Interfax, December 15)

But the chairman of the Duma’s Budget Committee, Yabloko’s Mikhail Zadornov, expressed some reservations about the viability of the budget. According to Zadornov, the document fails to account for more than 70 trillion rubles of revenue, which means that only 75-80 percent of the planned expenditures can be financed. (Interfax, December 14) Indeed, given the increase in fiscal receipts envisaged in the 1997 budget and the difficulties observed in collecting taxes in the past, it appears that practical budget developments will be determined by the government’s ability to raise revenue. With this in mind, the budget’s projected revenues of 11 trillion rubles in payments from tax arrears of past years — up from nine trillion originally envisaged — seems overly optimistic. (Segodnya, December 15)

Agrarians, Communists, and Vladimir Zhirinovsky’s Liberal Democrats voted for the budget, Yabloko against. The vote totals were 262 in favor, 122 against, and seven abstentions. (Interfax, December 15) Responding to Communist demands, Chernomyrdin repeated his earlier promise to pay wage and pension arrears by the end of this year to all except the army, which will be paid in January. Communist parliamentarians had also called for the dismissal of presidential chief-of-staff Anatoly Chubais as the price for passing the budget, but Chernomyrdin warned them not to confuse politics with economics and ignored their demand.

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