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. Last Updated: 07/27/2016

Spending May Hurt Stability, Yasin Says

Combined Reports


Economics Minister Yevgeny Yasin warned Monday that fulfillment of recent spending pledges could throw Russia's economic stabilization off track, and said the country would go bankrupt if it fails to conclude a deal with the International Monetary Fund on a $9 billion loan.


In a published interview, the minister appeared to fire a shot across the bow of his boss, President Boris Yeltsin, whose recent promises of more social spending for miners, pensioners and students have called into question the government's commitment to economic reforms.


While the Communist opposition could posture and make reckless budget pledges, "they do not have to reckon with the restrictions the state has to reckon with in the financial area," Yasin said in the interview published in the Interfax-AIF weekly newsletter.


"If the president embarked on that road, he would find himself in a very dangerous role," he said.


Yasin said the government should "simply follow the approved budget without any promises, collect taxes, pay wages to the public sector workers in time, pay pensions, finance defense orders."


"If we manage to maintain this state of affairs for the next five months, the situation would improve more than with the help of any other methods," he said.


Interfax quoted Yasin as saying negotiations on a $9 billion loan from the IMF were well advanced, but failure to secure it would be a heavy blow.


In a veiled warning to the State Duma, the lower house of parliament, not to pass any measures that might endanger reforms, Yasin noted that an a deal to restructure foreign debts would also collapse if the IMF deal failed.


"If the agreement on restructuring Russia's debt is not signed ... then we will go bankrupt," he said.


Yasin's comments were the latest sign that the IMF is about to grant Russia a three-year Extended Financing Facility and that the government is anxious to ensure that no last-minute doubts reforms emerge to threaten the deal.


Russia is also negotiating a new accord with foreign governments to restructure all remaining debts of the former Soviet Union. But an agreement is not due to be signed until May and depends on completion of the IMF deal.


The Central Bank said last week that broad agreement had been reached between Russia and an IMF delegation on an economic reform program that would be backed by the EFF loan.


Prime Minister Viktor Chernomyrdin said Saturday that IMF managing director Michel Camdessus would visit Russia in the later this month, and that Russia was preparing a statement on financial and budget policy before the visit. No date has been announced.


"All agreements with the IMF have been agreed at the expert level, and they are waiting for the political leaders, who will hold the appropriate talks," Interfax quoted Yasin as saying.


Although agreement with the IMF appears close, Yasin said much depended on Moscow.


"The question is to what extent we can meet the conditions," he said. "For Russia, the IMF represents credits which help us get through the hardest times on condition that we maintain a healthy policy." ()