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. Last Updated: 07/27/2016

Deputies Criticize Economic Decrees

Deputies in the upper chamber of Russia's parliament on Wednesday rejected government plans to ease the country's crippling payment crisis, demanding deficit-boosting subsidies instead. Leading members of the Federation Council dismissed a recent wave of presidential decrees, designed to halt a decline in industrial production and break the logjam of inter-enterprise debts, as only marginally effective. Instead, they demanded additional Central Bank credits for Russia's industries and pledged to boost the deficit in the draft budget for 1994. The attack came as Prime Minister Viktor Chernomyrdin, just before leaving for Sochi on a two-week vacation, met with President Boris Yeltsin to discuss the government's economic reforms program. Yeltsin, critical of Chernomyrdin for being slow on reforms, last week signed a package of six economic decrees and is expected to sign several more later this month. Several of the decrees are aimed at both helping and forcing enterprises to pay their debts. First Deputy Prime Minister Alexander Shokhin told the Federation Council that enterprises owed 8 trillion rubles ($4.2 billion) to the government in taxes and 23 trillion rubles to their suppliers. Banks owed the government 6.5 trillion rubles, he said, adding that all these figures were higher than in earlier months. The government has paid 3.5 trillion rubles of its internal debts for 1993, Shokhin said, careful to avoid making a much-disputed estimate of total internal debts. The representatives from 88 Russian regions who make up the Federation Council earlier this year demanded that the government present a program to ease the payment crisis by April 15, and Shokhin said that the recent package of presidential decrees had been part of this response. The decrees provide for a cut in taxes and remove some export restrictions; they also force enterprises to tap their hard-currency accounts to pay debts, raise fines for tax evasion and allow for a shutdown of insolvent state enterprises. Another package of draft decrees would, if signed, ease the sale of bankrupt companies and force enterprises to use their funds for debt payments rather than for salary increases. "This is not a program," said Alexander Titkin, deputy chairman of the council's budget committee. "Shokhin talked a long time about tiny parts of the problem, but there is no federal program for these problems." Titkin, echoing many of his colleagues in Wednesday's council session, said the decrees would only ease the payment crisis in the long run. He said that in the short term the government should emit additional credits, though he added that the government should tie these credits to stricter repayment conditions than before. Titkin said his committee was lobbying the lower house of parliament, the State Duma, to boost spending on defense, housing and support for the regions. He said this would raise the deficit in the 1994 draft budget, up for a second vote in the Duma next week, by more than 10 percent. The Federation Council can only adopt or reject the budget, but the budget is already so far overdue that the Duma, eager to avoid further delays, is vulnerable to pressure from the council. Various factions in the Duma also want to boost spending, reneging on their earlier commitment to keep the deficit under 10 percent of gross domestic product.