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Yeltsin to go back to work, take on the economy
November 21, 1996
Web posted at: 7:10 p.m. EST (2410 GMT)MOSCOW (CNN) -- Russian President Boris Yeltsin will have a full plate of duties to tackle when he returns to office Friday. The main course? The economy.
Russian officials on Thursday promised a thriving economy by the year 2000, but acknowledged they had problems in the latest round of talks with the International Monetary Fund (IMF).
Russia's Economy Minister Yevgeny Yasin said the cabinet gave its blessing Thursday to a blueprint for economic development which foresees output growth of five percent a year by 2000.
"It is an exceptionally difficult task," Yasin said. "But we cannot do it any other way."
Changes it wants include a shift to international accounting standards for Russian firms, and higher gas and electricity prices for households but lower prices for industry.
Officials have been predicting a return to growth in Russia for years, but it has yet to materialize.
An IMF mission is currently in Moscow to assess whether to issue the November installment of a $10 billion loan to Russia. The IMF is concerned about the country's low levels of tax revenue.
Poor tax collection is among the toughest problems facing Russia's economy. Tax receipts are only 65 percent of expected levels.
The IMF wants to see more tax revenues filling government coffers before they hand out another $320 million of the loan promised to help Yeltsin stabilize the country's economy.
Russia's economy, as measured by gross domestic product, shrank by six percent in the first nine months of 1996. Yasin has previously forecast a five percent GDP fall in 1996.
"The arrears on the consolidated budget has got to 132 trillion by the end of September," said Professor Richard Layard of London's School of Economics. "We know that many of the firms owing money have money."
In the physically and economically treacherous realm of Russian finance, there are accusations that the marriage between government and business is a cozy and continuing one.
"I think the leaders of these companies are simply the leaders of the government," said Gregory Yavlinsky, a member of the Russian Parliament. "That's why they have the exclusions and they (do) not have to pay taxes."
The charges are serious, but not new. Prime Minister Viktor Chernomyrdin regulated the gas industry while he was director of Gazprom, the country's largest gas company.
Yeltsin said after he was re-elected in July that reviving production was a key economic task.
The new program foresees annual inflation of five to eight percent and a boom in overseas investment to at least $10-$12 billion by the year 2000, Yasin said, from an expected $3-$4 billion in 1996.
But a state committee said if the current trend continues, inflation in November could tick up to two percent, the highest monthly rate since April, from 1.3 percent last month. It also said inflation for the year could be 22 percent.
While high by Western standards, this would be a huge reduction from last year's 131 percent.
Meanwhile, the tax police go after middle income Russians. Many here feel taxes are too high, hence many companies and individuals just cannot or do not pay them.
Problems with the IMF failed to mar Russia's return to international capital markets on Thursday with its debut eurobond.
And Russia is now saying to the IMF, don't push us, we can get along without your money, thank you.
But on the other hand, any loans would be greatly appreciated.
Correspondent Betsy Aaron and Reuters contributed to this report.
Related stories:
- Russia debuts on NYSE - November 15, 1996
- Playing Russian roulette - November 7, 1996
- Investors can now tap Eastern Europe, but the risks are many - September 19, 1996
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