President Boris Yeltsin and Prime Minister Viktor Chernomyrdin, at a special assembly in the Kremlin this weekend, sent a clear message to Russia's parliament: Pass a tight budget or take responsibility for the consequences.
Speaking to a gathering of political and business leaders from across Russia, Yeltsin sought to drum up support for a radical reform plan that he said would raise the economy out of crisis and thrust it into a period of rapid growth.
"We now have the first real possibility of improving the socio-economic situation in the country," said a composed and confident Yeltsin. "Until now the economy has been in crisis."
Saturday's meeting, held in the white marble Kremlin hall where the Communist Party Central Committee used to meet, seemed designed to put pressure on recalcitrant deputies to pass an austere draft budget for 1995 and to show the government's mettle to Western finance organizations.
Prime Minister Viktor Chernomyrdin told the assembly that if government's plans for the economy were endorsed and implemented, 1995 would be a year of financial stabilization followed by recovery in 1996 and major growth in 1997.
But State Duma speaker Ivan Rybkin said he had heard it all before.
"Isn't it odd that the 1995 to 1997 program practically repeats the goals declared for 1992 to 1993?" he asked. "I think this is the third time we've been told this."
The assembly came a day after the government encountered tough opposition in the State Duma to its strict 1995 draft budget. The Duma on Friday chose not to vote on the draft and instead ordered the formation of a conciliatory commission to come up with more acceptable proposals by Dec.10.
However there seems little room for compromise. While Chernomyrdin said the government was prepared to make some changes to the draft budget, he stressed that the deficit financing plans -- which would eschew the use of cheap Central Bank credits to bring monthly inflation down to less than 2 percent by the end of next year -- were non-negotiable.
"The government is ready to make compromises with the State Duma and Federation Council alike. The structure of revenue and expenditure and their overall amounts may yet be revised," he said. "But there are matters of fundamental importance, concessions on which will inevitably lead to a deterioration of the economic situation. These include above all the size of the budget deficit and the means of financing it."
The 1995 draft envisages financing a deficit of 7.8 percent of gross domestic product through a combination of $12.7 billion in loans from international financial institutions and a similar amount from issues of state securities.
The sources of funding for the deficit are far from guaranteed. An International Monetary Fund delegation is due to arrive in Moscow to consider releasing a standby loan of up to $6 billion and a ruble stabilization fund of $6 billion. Russia also stands to get around $3 billion from the World Bank in 1995.Convincing the IMF that it can implement its budget plans will be no easy task for the government. Rybkin demonstrated that the Duma will attempt to make a number of changes -- including increased spending on industry and agriculture -- before passing the budget.
"Today there is no doubt that backtracking on reform would be tantamount to a rejection of the future, that we have reached a point of no return," Rybkin said. "But does this mean there are no alternatives?"
This approach seemed unlikely to appeal to Chernomyrdin, however, who attacked deputies who voted Friday to increase the minimum wage, costing state coffers an extra 15 trillion to 16 trillion rubles ($4.6 million) per month.
"Who will take responsibility for that?" asked the prime minister. "I ask you, esteemed deputies, to foresee the consequences of decisions that are taken. Nothing appears out of thin air."
Speaking to a gathering of political and business leaders from across Russia, Yeltsin sought to drum up support for a radical reform plan that he said would raise the economy out of crisis and thrust it into a period of rapid growth.
"We now have the first real possibility of improving the socio-economic situation in the country," said a composed and confident Yeltsin. "Until now the economy has been in crisis."
Saturday's meeting, held in the white marble Kremlin hall where the Communist Party Central Committee used to meet, seemed designed to put pressure on recalcitrant deputies to pass an austere draft budget for 1995 and to show the government's mettle to Western finance organizations.
Prime Minister Viktor Chernomyrdin told the assembly that if government's plans for the economy were endorsed and implemented, 1995 would be a year of financial stabilization followed by recovery in 1996 and major growth in 1997.
But State Duma speaker Ivan Rybkin said he had heard it all before.
"Isn't it odd that the 1995 to 1997 program practically repeats the goals declared for 1992 to 1993?" he asked. "I think this is the third time we've been told this."
The assembly came a day after the government encountered tough opposition in the State Duma to its strict 1995 draft budget. The Duma on Friday chose not to vote on the draft and instead ordered the formation of a conciliatory commission to come up with more acceptable proposals by Dec.10.
However there seems little room for compromise. While Chernomyrdin said the government was prepared to make some changes to the draft budget, he stressed that the deficit financing plans -- which would eschew the use of cheap Central Bank credits to bring monthly inflation down to less than 2 percent by the end of next year -- were non-negotiable.
"The government is ready to make compromises with the State Duma and Federation Council alike. The structure of revenue and expenditure and their overall amounts may yet be revised," he said. "But there are matters of fundamental importance, concessions on which will inevitably lead to a deterioration of the economic situation. These include above all the size of the budget deficit and the means of financing it."
The 1995 draft envisages financing a deficit of 7.8 percent of gross domestic product through a combination of $12.7 billion in loans from international financial institutions and a similar amount from issues of state securities.
The sources of funding for the deficit are far from guaranteed. An International Monetary Fund delegation is due to arrive in Moscow to consider releasing a standby loan of up to $6 billion and a ruble stabilization fund of $6 billion. Russia also stands to get around $3 billion from the World Bank in 1995.Convincing the IMF that it can implement its budget plans will be no easy task for the government. Rybkin demonstrated that the Duma will attempt to make a number of changes -- including increased spending on industry and agriculture -- before passing the budget.
"Today there is no doubt that backtracking on reform would be tantamount to a rejection of the future, that we have reached a point of no return," Rybkin said. "But does this mean there are no alternatives?"
This approach seemed unlikely to appeal to Chernomyrdin, however, who attacked deputies who voted Friday to increase the minimum wage, costing state coffers an extra 15 trillion to 16 trillion rubles ($4.6 million) per month.
"Who will take responsibility for that?" asked the prime minister. "I ask you, esteemed deputies, to foresee the consequences of decisions that are taken. Nothing appears out of thin air."
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