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Russia: Duma Unlikely To Pass 1997 Budget

  • Stephanie Baker



Moscow, 4 December 1996 (RFE/RL) - Russia's State Duma will resume debate on the 1997 budget this week, but most observers predict that a protracted and uncertain battle lies ahead.

The Duma's Budget committee decided yesterday to recommend that deputies reject the revised 1997 budget in a vote expected on Friday. The committee's chairman, Mikhail Zadornov, told the Interfax news agency that the budget will certainly not be passed before the end of the year.

Zadornov, a member of the reformist Yabloko faction, said that changes proposed by a conciliation commission made up of parliament and government representatives had not improved the budget draft.

The Duma rejected the budget in its first reading last month, but decided to set up a commission to prepare a compromise draft. Many deputies in the opposition-dominated Duma criticized the draft for overly-optimistic revenue predictions and for not doing enough to help those who have suffered under the economic reforms.

Members of the conciliation commission last month agreed to reduce spending targets and increase the budget deficit slightly. The reworked draft calls for a deficit of 3.5 percent of gross domestic product and projected revenue of $73.6 billion.

But the changes did little to quell criticism in the Duma. Yabloko faction leader, economist Grigory Yavlinsky, said two days ago that the new draft is even worse than the original version. He predicted that the budget has few chances of being passed in the Duma.

Yavlinsky said the draft provided no control over the implementation of the budget or made changes to expenditure. The Duma is today considering a Yabloko faction proposal for a budget code to regulate the budget's approval and implementation.

Failure to pass the budget could affect Russia's ability to receive regular disbursements of a $10.1 billion loan from the International Monetary Fund (IMF). The IMF has delayed releasing the latest tranch of the loan because of concern over the government's poor tax collection record.

Prime Minister Viktor Chernomyrdin is to address the Duma on Friday to outline the government's medium-term economic program and to discuss the budget. He said over the weekend that there would be what he called "political consequences" if deputies delayed approval of the budget.

Chernomyrdin did not elaborate, but analysts say if the impasse continues President Boris Yeltsin could decide to dissolve the Duma. Under the Russian Constitution, the president can dissolve the Duma and call new elections if it rejects the budget twice. But he can only do so one full year after the Duma was elected, which in this case means December 17.

However, the Duma can also pass a no confidence vote in the government. Communist Party leader Gennady Zyuganov has threatened to call such a vote in the context of the budget discussions.

Roland Nash, an economist with the Moscow-brokerage house Renaissance Capital, says neither side wants fresh parliamentary elections. But he says the Duma is in a much stronger position now than it was in previous years. Many believe opposition parties would do better if new elections were held against the current backdrop of strikes over massive wage arrears, such as today's strike by thousands of miners.

It is now widely expected that the government will operate without a budget for the first three months of next year, or alternatively, that the Duma will approve a plan just for the first quarter.

According to Nash, it is difficult to see what kind of compromises will be crafted in the meantime. He says there is a contradiction between the Duma's desire for more social spending and its criticism of the tax revenue targets being too high. Nash says the end result could be a higher budget deficit.

For some, the budget is already projecting spending and revenue targets that are too high. Andrei Illarionov, director of the Institute for Economic Analysis, told a news conference in Moscow today that the budget is "absolutely unrealistic." He said if he were Gennady Zyuganov, he would approve the budget and watch the government falter as it attempts to implement an impossible plan.

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