"What has been decided and what will be done is actually the second stage of Russia's reform, a breakthrough toward economic and financial stability," said Anatoly Chubais, deputy prime minister in charge of economic issues, at a joint news conference with new Finance Minister Vladimir Panskov and new Economics Minister Yevgeny Yasin.
The government is counting on some $12 billion in foreign credits and more than 40 trillion rubles ($12.9 billion) in state bond issues in 1995 to fill a 75 trillion ruble budget deficit without relying on inflationary Central Bank credits. The financing scheme, which experts have called overly optimistic, is key to the government's plans to bring monthly inflation down to 1 percent by the end of next year, down from 15 percent in October.
"The methods of covering the deficit are not easy, but it can be done," Panskov said. "The state securities market has expanded to 10 trillion rubles now from nearly nothing last year, and there is no reason why it cannot rise four-fold next year."
Panskov's statement comes at a time when the government bond program is faltering in the wake of a recent ruble crisis and growing inflationary fears. The Finance Ministry has not been able to sell a full issue of treasury bills in over a month.
But the new economic team stressed that the essential parts of the budget, which is expected to face a rough ride through the State Duma, must remain unchanged, although minor amendments were acceptable.
"The target is to maintain the most important budget principle, which is to stop borrowing from the Central Bank under non-market terms," said Yasin.
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