Lower Revenue, but Budget Is on Target

The Russian government managed to keep close to its budget targets during the first six months of the year by cutting spending in the face of sharply lower revenues, acting Finance Minister Sergei Dubinin said Monday.Dubinin told a news conference that the deficit was 25 trillion rubles ($12.5 billion), or about 10.4 percent of gross domestic product, compared with a target of 10 percent.Revenues fell to 65 percent of projections during the first six months of the year as a result of the steep drop in industrial production and a lower level of inflation than had been budgeted. Expenditures, however, were kept to 78 percent of the spending plan."The biggest problem of 1994 is a drop in tax revenue and other budget revenues from the level we had forecast," Dubinin said. "The production slump is substantially worse than we expected."The relative strength of the ruble, compared with its projected level, has helped the government stay close to its targets, Dubinin added.President Boris Yeltsin signed the budget Friday after it was adopted by both houses of parliament. The former Supreme Soviet had refused to adopt the 1993 budget and Dubinin said the passage this year amid political resistance marked a success for the government even though it was approved six months late.He said the Finance Ministry had already given its initial proposals for the 1995 budget to the government en route to submitting the spending plan to parliament in September with hopes of gaining approval by December.Dubinin said he expected economic stability in 1995, with inflation brought down to 3 percent monthly, as a result of continued efforts at tight monetary policy."The year 1995 will be decisive," he said. "I do not say that the year will see rapid economic growth, but with this economic policy we will see the stabilization of production and an increase in domestic output by the end of the year."While June inflation ranged between 5 and 6 percent in June, Dubinin said he still expected the rate to be between 7 and 8 percent by year end.Deputy Finance Minister Andrei Vavilov said the government had set aside 9 trillion rubles to repay Russia's foreign debt. He declined, however, to specify how much had been set aside for government as opposed to commercial creditors because negotiations with commercial creditors for a rescheduling have not yet been completed.