Publication: Monitor Volume: 3 Issue: 100

Russian prime minister Viktor Chernomyrdin called on the Duma this morning to approve deep cuts in public spending to compensate for a shortfall in tax revenue. So far this year, tax collection is only a little over half the planned level. To make up the shortfall, Chernomyrdin said President Boris Yeltsin will shortly sign a decree cutting $7 billion in welfare benefits. (Itar-Tass, BBC World Service, May 21) Chernomyrdin’s appeal is expected to provoke a hostile reception from parliament. The Communists and their nationalist and agrarian allies have already said that they will not approve the proposed spending cuts and have called instead for an expansion of the money supply — that is, for money to be printed to bridge the deficit. The government has rejected that path since it says it would fuel inflation and reduce the confidence of investors in the Russian economy. The liberal Yabloko faction also says it will veto the spending cuts and has begun to campaign for a vote of no confidence to oust the government from power. The government says it will go ahead with the spending cuts whether parliament approves them or not, but, as First Deputy Finance Minister Aleksei Kudrin recently acknowledged, such a path is "less legal" than getting parliament’s approval. (Interfax, May 15)

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