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Analysis: Yeltsin Calls For Economic Growth

  • Ron Synovitz



Prague, July 11 (RFE/RL) -- Speaking yesterday in the first nationally televized address since the confirmation of his re-election by the Central Electoral Commission earlier this week, President Boris Yeltsin said the government would seek to increase industrial production and investment in order to raise living standards for all Russians.

This emphasis on growth policy reflects demands from a spectrum of political forces in Russia -- including bankers and business executives, the State Duma and Yeltsin's main rivals in the recent presidential campaign.

Yeltsin said that his main task in the years ahead would be to "give production a second wind, give enterprises orders and give people work."

His decision to re-appoint Prime Minister Viktor Chernomyrdin as the head of the government appears to signal a commitment to continue reforms and to reassure local and foreign business leaders.

Yeltsin said that "the struggle against corruption in all echelons of power" would be the most important direction of his work. He earlier appointed former army commander Alexander Lebed as the secretary of the Security Council -- a position which gives Lebed wide powers to crack down on economic crimes.

The president's words sometimes echoed rhetoric used either by his main election challenger, Communist Party leader Gennady Zyuganov, or liberal economist Grigory Yavlinsky, who was fourth in the first round of the election.

Yeltsin made it clear that he would try to avert social discord by adopting policies that would boost social protection and industry.

Though he spoke mostly in generalities, the president's comments were in line with more detailed policy statements made earlier this week by his chief economic adviser, Alexander Livshits.

Livshits said that the government would concentrate on boosting productivity and investment while also maintaining its financial stabilization program, which, he said, would keep the monthly inflation rate below two percent next year. Livishits said that until now, all efforts were focused on fighting inflation. But, he said: "Low inflation cannot be the only final goal of economic policy any longer."

Livshits said Russia's main economic goal through the end of this year would be "to lift obstacles to investment" in order to pave the way for increases in productivity and foreign investment next year.

He also said the government would take steps to increase tax revenues and to lower interest rates by opening the government debt market to foreign investors. He said these steps would ensure that economic growth would resume by the end of this year.

Russia failed to collect about 40 percent of budgeted tax revenues during the first half of 1996. In order to recoup about 5,850 million dollars in tax arrears by the end of this year, Livshits said the government plans to cancel all tax privileges and raise municipal utility charges.

In the social sector, Livshits said the government would reorder its economic priorities to ensure that "the rich should help the elderly."

He said budget spending is being urgently redistributed so that delayed pensions are paid. He said contributions to the pension fund are being raised, but that the entire pension system eventually would have to be overhauled.

Some of the policy shifts described by Yeltsin and Livshits had been demanded earlier this week by Russia's lower house of parliament, the State Duma, which classified Russia's current social and economic situation as requiring an emergency rescue treatment. Duma deputies resolved that urgent measure must be taken -- including the adoption of a long-term strategic plan on social and economic development.

The Duma called for a shift to a macroeconomic policy that would create the prerequisites for economic growth, stimulate investment and boost demand in the consumer market. It also urged reforms to modernize industry, lower the tax burden and simplify the tax system.

The Duma has resolved to send a document suggesting economic and social policy goals during the next four years to Yeltsin, to the Russian Federation Council and to the legislative and executive power structures within the Federation.
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