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. Last Updated: 07/27/2016

Kremlin Pledges Funds on Eve of Vote

President Boris Yeltsin on Monday doubled Russia's minimum wage, adding to other populist spending measures enacted by the government in the final week before the Dec. 12 elections.


The government's new spending plans, totaling about 1. 5 trillion rubles ($1. 2 billion), include money for the army, the regions and law enforcement, and are specifically targeted at groups that may vote against pro-Yeltsin parties in the elections.


The presidential decree almost doubles the minimum wage to 14, 620 rubles ($12) from 7, 740 rubles monthly and increases stipends for students, scientists and researchers.


Despite the measures, which included promises to pay more than 220 billion rubles to support the coal industry, 50, 000 coal miners went on strike Monday to press the government to complete talks on the payment of back wages and retraining and resettlement for when mines are closed down.


The strike, which spread from Vorkuta in Russia's Far North to the Urals, was suspended Monday evening after talks between miner's leaders and the government, Interfax reported. The news agency gave no details of the agreement reached (Page 11).


The president left Moscow for the Caucasus republic of North Ossetia on Monday to attempt to broker a solution in a bitter local ethnic dispute.


Yeltsin's decree raising the minimum wage was announced on the same day that the government released figures which put the inflation rate for the month of November at only 15 percent, down sharply from 21 percent in October and the lowest monthly rate since September 1992.


Western economists have expressed concern that election promises, if acted upon, could reverse this downward trend. But the new measures, could just be electioneering that will never be put into effect, the economists said.


"There are two things going on at the same time", said one Western economist. "One is the strong determination of the government for a stabilization program and the other is the election campaign".


The economists said that the government was persisting with efforts at spending control behind closed doors.


"I would not be worried", said the economist. "There is some contradiction, of course, but you could not expect anything less before the elections".


The Ministry of Finance said that it would fund 1. 5 trillion rubles worth of new programs in the first part of this month, including 300 billion rubles for "defense and support for army servicemen" and 537 billion rubles "to support living standard in the regions".


The ministry said, however, that it would not use deficit spending to meet these obligations and would only make the expenditures when it had revenues to cover them.


Government officials could choose not to follow through on the spending plans after the elections or they could rely upon loans from the International Monetary Fund or the World Bank to pay for some of it.


Those loans, stalled when economic reforms veered off track, could be forthcoming in January if reformist parties form a government that can push through a tough economic program, a Western diplomat in Moscow said.


The inflation figures, from the government's Center for Economic Forecasting, gave the first indication in several months that Russia was nearing the targets to qualify for those loans.


Economists said that the reduction reflected the tight monetary policy which the government put in place in June and July, including reducing credits to enterprises and raising the Central Bank's lending rate.


Yet the trend is not expected to continue. Inflation tends to show up in the Russian economy about four months after spending measures are taken and massive agricultural credits were issued in the autumn to pay for the harvest.