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. Last Updated: 07/27/2016

Analysts Welcome New Yeltsin Decrees

Analysts Thursday welcomed moves by President Boris Yeltsin to free prices for oil products and other goods, impose tighter control over monopolies, and end special export tax breaks.


But they warned that a package of decrees signed by Yeltsin on Tuesday must amount to more than window dressing to please international creditors.


"These are moves in the right direction," said Ardy Stoutjesdijk, head of the Moscow bureau of the World Bank. But he added: "As always with these decrees you cannot really say much until you've seen the fine print."


The timing of the decrees was clearly linked to ongoing negotiations with the International Monetary Fund over a $6.3 billion standby loan, which are expected to be completed by the end of the month.


"They are part of the prior actions necessary for the agreement," said one Western economist, who declined to be named.


But another Western economist cautioned that Yeltsin is walking a tightrope between being "spendthrift enough to please the State Duma and stingy enough to please the IMF."


One decree states that any actions that will increase spending or cut revenues in a manner not covered by the budget will require Yeltsin's personal approval.


The decree could represent a significant break with past practices whereby powerful interest groups exerted influence on the government to win more funds, said one senior Russian economist, who declined to be named.


"Directors used to come to the relevant ministry and simply ask officials to second their requests for state money or tax privileges without giving any specific reasons," he said. "Lobbying will continue, of course, but at least technically the procedure will be much more complicated."He said another decree, which cancels the right of local authorities to regulate prices for oil products and other goods, is likely to run into strong opposition in regions like the Far East, where such goods are expensive to transport from central Russia.


The liberalization of oil product prices would have a knock-on effect on prices in other sectors and thus delay the stabilization of general prices by about a month, he said.


But Mikhail Kutsobin, a senior analyst with the Fuel and Energy Ministry, said that although oil product prices have been growing faster than inflation, they were unlikely to jump immediately after being released, since the winter, when petrol and other types of fuel are in higher demand, is coming to an end.