The government's plan to finance the 1995 budget deficit by relying largely on state securities is a long shot, but it just might work, analysts said Monday.


Success or failure, however, depends on the government's ability to come up with new, attractive financial instruments and secure the stability of the ruble's exchange rate, they said.


"This plan is very difficult to accomplish, but it's not entirely without foundation," said Mstislav Afanasyev, deputy director of the government Center for Economic Reform. "The government can manage it."


The government has stated its intention in the draft budget to issue more than 40 trillion rubles' ($14 billion) worth of bonds to cover most of the 7.8 percent deficit it envisages for 1995. The program was immediately written off by many officials and analysts as unrealistic.


But Monday, although warning the target would be difficult to fulfill, dealers and economists said the task was not an impossible one. But to manage this, the government must expand the existing market for bonds by improving the investment climate and issue new securities, they said.


Vadim Yegorov, spokesman for the Moscow Interbank Currency Exchange where government bonds are traded, said the T-bill program was more successful this year than the government had expected and could expand further in 1995. By the end of September, for example, 10 percent of this year's budget deficit was being covered through the T-bill program, he said.


Others, however, pointed out that the short-term bond program -- so far the government's most successful -- could at best raise about 15 trillion rubles and the government has to come up with other financial instruments to meet its 40 billion ruble target.


"The 40 billion figure is a bit too optimistic," said Alexander Ivanishchev, an expert with Grant Financial Services. "They must have some other programs if they plan to raise more money."


Marina Chekurova, deputy director of Securities and Financial Markets department at the Finance Ministry, said the government is planning to do just that with a new one-year personal savings bond that would yield quarterly dividends.


Chekurova said Sberbank, which has the largest network of local branches, is likely to manage distribution of the bonds, and would pay a competitive rate of interest.


"The bonds would pay same rate that the banks offer and, maybe, a bit more," she said.


The savings bond, which is expected to be issued in the first quarter of 1995, will be aimed at soaking up hundreds of millions of dollars held by Russians, said Afanasyev. Personal savings in Russia have risen to 12 percent of total income in October from 6 percent at the start of the year, he said.


"If these bonds pay a good rate of interest, they could be very successful," said Ivanishchev of Grant.


However, for the time being, the government has to make do with expanding the existing bond program, which has suffered as a result of the recent ruble crisis.


Last week, the Finance Ministry was forced to suspend auctions of 6-month bonds and sold less than a third of its first one-year bond issue.


Investors said the ruble's roller-coaster ride has drawn money away from bonds and into currency speculation. Keeping the ruble stable is, therefore, a key condition for developing the bonds market, they said.


"They would first have to rebuild the confidence in the market and rekindle demand," one dealer said. "The ruble's crash has put the bond program back to where is was at the start of the year."


"The ruble is keeping investors out," said Victor Huaco, president of the brokerage firm LTS-Finance, adding that the government can meet what he termed the "very aggressive" targets set for the bond program, but only if can keep a grip on the exchange rate.


Yegorov of MICEX said the government had to expand the bonds market beyond the capital because the Moscow market has reached saturation point. The groundwork for securities trading is being prepared in Vladivostok, Novosibirsk and St. Petersburg, he said.


Some dealers were still rather pessimistic about the bond program's prospects, however, saying the recent ruble crisis has seriously undermined the market.


Vitaly Sotnikov, securities analyst with Rinako-Plus, called the government's plan "a bit adventurous," saying that the current market situation does not promise such a bright future for the government bond program.


"The demand for a short-term bonds has lately declined and the government is forced to sell at a high yield. I'm not sure that paying such high interest will be much cheaper for the government than handing out cheap credits," he said.