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. Last Updated: 07/27/2016

Goverment Is Close to Target on Credits

The government is almost on target to meet its credit emission goals for 1993 and could hit it within a few percentage points, a government economist said Thursday.


Andrei Illarionov, deputy chairman of the Center of Economic Reform and economic adviser to Prime Minister Viktor Chernomyrdin, said that the increase in credits to state enterprises would probably be around 35 percent in the second quarter, as compared to a target of 30 percent set in an agreement between the Central Bank and the government in April.


"It is not bad at all compared to the kind of things they used to do", said Illarionov, noting that the Central Bank's loose monetary policy in the first quarter of 1993 increased credit emissions by 50 percent.


However, a report prepared by the Center for Economic Reform and the Center for Economic Performance, which both work for the government, showed that the Central Bank continued to increase credits to Russian enterprises in May despite the April agreement to limit monetary growth.


The report showed that in April the Central Bank and the government had agreed to hold credit growth at 30 percent per quarter.


But he said credits have been declining since the Central Bank and the government signed a more formal accord in May to control inflation and reduce growth in the money supply.


Illarionov said that the second quarter credit increases, if realized at 35 percent, would be "a positive outcome of the May agreement".


The growth in personal income in May, at 14. 7 percent, lagged behind the inflation level of 19 percent, according to the center. The figure represented a dramatic decline from the 34. 9-percent growth registered in April, a figure that Illarionov attributed to political reasons.


He said that in April, on the eve of the referendum, President Boris Yeltsin increased compensations and wages for various interest groups, including student and pensioners.


"In May the policy towards additional payments was much more responsible", said Illarionov.


The monthly inflation rate in May of 19 percent represented a slight rise from the April figure of 17 percent reported by the center last month.