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. Last Updated: 07/27/2016

President Signs Budget, Warns of Arrears

President Boris Yeltsin has signed Russia's 1998 budget after months of wrangling with the State Duma, or lower house of parliament, and he laid down a tough challenge for the man he wants to lead the government.

The Kremlin press service said Friday that Yeltsin had approved the budget Thursday -- the final day of a two-week deadline after it was approved by the Federation Council, parliament's upper chamber.

It will serve as the main economic policy guideline for Yeltsin's new Cabinet, which he would like to be headed by acting Prime Minister Sergei Kiriyenko.

Yeltsin sacked the previous government of Viktor Chernomyrdin at the start of the week, saying the benefits of reforms were not felt by the people and more dynamic leadership was required.

In a radio address Friday, Yeltsin said 1998 must be a year of economic decisions and industrial growth, and singled out the problem of nonpayment of salaries for special attention.

"We must not allow wage arrears to pile up," he said.

But the government intends to keep a tight rein on spending. Presidential aide Alexander Livshits, who is responsible for economic policy, said this week that spending plans should be trimmed if necessary to match revenue flows.

He said Yeltsin had reservations about how realistic the budget targets are, but the document is regarded as an important platform for achieving Russia's first stable economic growth since radical market reforms began in 1992.

The Kremlin press service said the 1998 budget aimed to achieve gross domestic product and industrial production growth of no less than 2 percent, compared with 0.4 percent GDP growth in 1997.

It also seeks to halt the slump in agricultural production. Other measures included lower customs tariffs and a reduction in the tax burden for producers.

The budget has been threatened by low world oil prices, since Russia is a major oil producer. A decision to scrap oil transport tariffs would also hurt revenues.