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Russia: Primakov To Release Details Of Economic Plan Tomorrow

Moscow, 4 November 1998 (RFE/RL) -- Russian Prime Minister Yevgeny Primakov is expected to release a long-awaited economic plan tomorrow.

On Saturday, the government revealed an outline of the plan, which envisages greater state control of the economy. But few details of the document have emerged.

Even after a Monday meeting between Primakov and parliamentary leaders, the plan remained vague. Critics noted, in particular, a lack of detail on efforts to boost state revenues.

The speaker of the Federation Council (upper house), Yegor Stroyev said his chamber, which groups regional leaders, would probably back the new plan. But Communist party leader Gennady Zyuganov, who heads State Duma's (lower house) largest political group, did not comment.

The delay in providing details of the plan has surprised many observers who had expected some concrete measures to be unveiled by now, nearly two months after Primakov's government took office. But the Prime Minister has insisted that the plan should be seen as a "self-developing system of measures" subject to continual revision, rather than a fixed program to tackle the country's financial crisis.

Some general elements of the plan are known. It includes tax breaks for industry and financing from the Central Bank through the printing of money. It calls for regulation of prices on essential foods and medicines and a gradual reduction of the value-added and profit taxes. Exporters will have to sell 75 percent of their hard currency to the government, while the Central Bank will carry out its program to restructure the commercial banking system.

Despite uncertainty over many of its particulars, the economic plan has been sharply criticized. Grigory Yavlinsky, leader of the pro-reform Yabloko party, predicted the plan would depress gross domestic product by 10 percent in 1999. He also predicted that the plan would lead to 200 to 300 percent inflation next year, well above the government projection of 30 percent.

Many press commentators have also been critical. Evoking Primakov's diplomatic background, the daily "Nezavisimaya Gazeta" wrote yesterday that the Prime Minister is deliberately using vague terminology. In recent days, the daily "Izvestya" wrote that the plan "is of no significance (and) appears to be a political declaration, rather than a document of effective economic guidelines." Another daily, "Vremya MN," said the plan's "various points and parts have no connection to the whole, and therefore the program cannot be an instrument for real policy."

Former first deputy prime minister Boris Nemtsov told RFE/RL that "for the moment, Primakov has avoided confrontation with the State Duma, because he is not taking any genuine economic initiative."

Nemtsov said that if the government really started confronting economic problems, the political situation would become turbulent. As an example, Nemtsov said that the government should oblige the powerful gas monopoly Gazprom to settle its tax bill with cash, instead of accepting --as was recently announced-- barter payments.

"If we recall what happened under the previous government (of former prime minister Sergei Kiriyenko), then I must note that we agreed to the five percent sale of Gazprom shares only in the event that Gazprom would start paying its taxes regularly --and, moreover, not by barter but with real money."

Most political groups in the Duma that had strongly opposed Kiriyenko's government backed Primakov's appointment in September. Since then, the new government has not solved any major economic problems. But the panic that erupted when the previous government devalued the ruble and froze debt repayments seems to have subsided for the time being. Prices are still rising but not, as before, on a daily basis. Shops and markets are well stocked and the ruble, which has settled at around 16 to the dollar, no longer fluctuates dramatically.

Primakov has been given credit for stabilizing Russia's political environment as an ailing President Boris Yeltsin fades from the limelight.

But economic analysts and liberal politicians remain wary, warning of what some call an "imitation of stabilization." They say that whatever stability exists at present is, paradoxically, due largely to the government's i-n-action. They note that Primakov has n-o-t taken control of the economy and has limited plans for the massive printing of money, in the expectation of monetary help from abroad.

That expectation is not likely to be fulfilled anytime soon. Before it left Moscow last Friday (Oct. 30), an International Monetary Fund delegation said the government still has a number of key economic policies to decide upon before any further financial support can be considered.