Report Says Deficit Cuts Exaggerated

A top parliament committee accused the government Monday of exaggerating its progress in the campaign to cut the budget deficit and steady the economy.


"The government's conclusion about the gradual stabilization of the economic situation is premature and insufficiently justified,'' said a report by the Budget Committee in the State Duma, the lower house of parliament.


"The government is not coping with the task of paying for the deficit from noninflationary sources,'' it added.


The Duma committee is chaired by Mikhail Zadornov, a leading member of the liberal faction Russia's Choice which contains a number of other prominent reformers.


Earlier this month the Finance Ministry and Central Bank issued a rare joint statement, announcing that the deficit in the first quarter amounted to only 3.3 percent of gross domestic product, well below the 5 percent target for the year, as revenues came in above plan.


The ministry said it expected to meet the goal of funding the shortfall this year without turning to inflationary sources.


But the Budget Committee report said first-quarter results show revenues and deficit financing are well below planned levels. It said spending was underfinanced by 18 percent and deficit financing came in 36 percent below target.