"We are floating. No one can tell you the direction of Russia's economic policy today," Alexashenko said.
The West was "hostage" to Russian policy, declared Alexashenko, one of the few reformers left in Prime Minister Viktor Chernomyrdin's conservative government.
He said in an interview that instability over the military drive to crush secessionist Chechen rebels could hit pro-democracy, free-market reforms backed by Western funds.
"We have parliamentary elections this year. There will be political instability. It's easy to predict who wins elections at times of political instability -- fascists and communists."
Elections to both chambers of parliament are scheduled for December. Presidential elections are set for June 1996.
"Economic and political instability is not the best of conditions needed ahead of presidential elections. The West is the hostage to Russian policy," he said.
The International Monetary Fund and the West should relax purse strings if they wanted a stable Russia, Alexashenko said.
"Not only the IMF, but the West in general have no other choice," he said. Otherwise, "the budget will be unbalanced, there will be political instability."
The war in Chechnya is the latest in a series of setbacks to a credible, deflationary economic policy and a tight 1995 budget that Moscow says will secure a $6.4 billion IMF standby loan.
A top IMF delegation in Moscow has been trying to guess which way the economy will swing amid parliamentary demands to change an already diluted 1995 budget to include the Chechnya war.
Parliament, packed with deputies hostile to reform, refused to pass the 1995 budget Friday. Its approval is one condition for the release of the IMF standby loan.
Parliament's budget deficit of 73.2 trillion rubles ($18.5 billion) compares to a planned government gap of 71.7 trillion rubles, or 7.7 percent of GDP.
Alexashenko said military action in Chechnya had cost the government 800 billion rubles so far, but was unlikely to increase state spending much in the short term.
"I can't imagine our economy being more militarized than it is today," he said.
The real cost of Chechnya would be political instability, which would undermine the government's credibility on markets, he said.
"Up to now, the war is not costing us much. The price of political instability is bigger," he said.
The ruble has fallen 11.2 percent against the dollar so far this year, outpacing 10.4 percent inflation.
"If inflation is a major indicator of reform, it means we have no reform now," Alexashenko said.
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