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Russia: Yabloko Deputy Cautiously Backs 1998 Budget

Moscow, 28 August 1997 (RFE/RL) -- A senior member of the State Duma's Budget Committee threw her cautious support behind the government's draft 1998 budget, but predicted most deputies would give the plan a rough reception.

Oksana Dimitrieva, a member of the opposition Yabloko faction and deputy chair of Duma's Budget Committee praised the 1998 budget for being realistic.

The draft budget, submitted to the Duma Monday, foresees expenditures of 472 trillion rubles ($81 billion) and revenues of 340 trillion rubles, with a deficit of 4.8 percent of gross domestic product.

Dimitrieva said the revenue and expenditure targets differ little from levels expected this year after the government slashed spending due to dismal tax revenues. The cuts were carried out despite the Duma's opposition.

"The project is more realistic than previous budgets, which will make it even more difficult to get passed," she told a news conference.

The opposition-dominated Duma, Russia's lower house of parliament, has stonewalled the government's budget plans in the past, jacking up spending on pet projects and tacking on rosy revenue predictions. The 1997 budget, characterized as unrealistic by both cabinet members and legislators, was signed into law only in February of this year.

This year's budget battle is expected to be just as tough. "The fate of the 1998 budget will not be easier than last year's budget," said Dimitrieva.

Deputies are scheduled to vote on the plan in a first reading October 8. Some legislators are already signaling that the budget will need to be overhauled before being passed.

President Boris Yeltsin has warned deputies against increasing spending unless they can find other cuts to carry out. The Duma's Communist chair, Gennady Seleznyov, responded Monday by saying increased spending on certain items could be financed by eliminating the offices of presidential representatives in the regions, which he said would save 1 trillion rubles. He also said savings could be found by scaling back government bureaucracy, including ministries and the Duma itself.

Dimitrieva praised the government for trying to restructure budget priorities by cutting away wasteful spending on agriculture and industry and increasing support for health care. But she said social welfare programs do not get enough attention.

Russia's regions also face cuts in subsidies under the plan, making it likely that the Federation Council, the upper house of parliament which groups regional leaders, will not merely rubber-stamp the budget as it has in previous years.

But the real fight remains in the Duma. As the investment bank Renaissance Capital wrote in a recent research note: "The left-wing Duma will be looking to substantially increase targeted expenditures. This will enable it both to be seen as more populist when the budget is being passed and will simultaneously give it the opportunity to criticize the government next year when the targets are missed."

Dimitrieva applauded the government's forecast of 5 percent annual inflation and 2 percent growth next year, but said the plan stops short of creating the conditions for a real economic recovery.

The government is calling the 1998 plan a "budget of economic growth." But Dimitrieva dismissed the claim, saying: "A budget of economic growth first of all should be based on a normal tax system. Until we create a normal tax climate, we will not have economic growth."

The 1998 budget is based on a new draft tax code, which the Duma passed in its first reading in June. But the bill still faces several more hurdles in parliament before being finally approved.

Yabloko has been one of the bill's fiercest critics, saying the proposed reforms fail to provide real tax relief and concentrate too much power in the hands of the tax authorities. The reformist faction dominates the Duma's Budget Committee, which traditionally recommends whether deputies should support different pieces of economic legislation.