Russian plan to save economy gets initial OK Chance of success slim without a draft budget

December 04, 1998|By LOS ANGELES TIMES

MOSCOW -- Nearly four months after Russia's economy went into a tailspin, the government gave preliminary approval yesterday to a plan designed to pull it out of its dive.

The plan includes a list of 33 draft laws and 36 other measures aimed at lowering taxes and increasing investment, but it does not address the badly out-of-balance federal budget -- the key to any rescue plan.

"They are trying to impress the public with the number of the laws and decrees in the program," economist Otto R. Latsis said. But until the government plainly presents their draft budget, no one in their sound mind will believe that they have a program."

The International Monetary Fund and other lenders insist that the government step up tax collection and cut social benefits -- both of which are unlikely to be popular with workers who are unused to paying taxes and who have not been paid for months and years.

The government's plan calls for lowering taxes on businesses and individuals in the hope that more people will pay up -- a theory the IMF disputes.

The program also calls for paying off wage and pension debts, imposing currency controls on exporters and restructuring the collapsed banking sector. It will set up a Russian development bank to channel investment into promising industries.

At a news conference, Economics Minister Andrei Shapovalyants acknowledged that the government is still counting on IMF funds for part of its revenue.

The government is asking parliament to pass the necessary legislation to implement the plan in the next six weeks.

Pub Date: 12/04/98

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