Russian Budget Delayed Again, Imf Talks Hard

Russias long overdue 1998 budget ran into a new delay when the opposition-led parliament dropped a final reading of the bill from Wednesdays agenda and one of its committees came out against a key government amendment.

Adding to the discomfort for the government, a day after a warning from President Boris Yeltsin that he will sack ministersif they fail to clinch a workable budget, were reported snags in loan talks with the IMF.

Prime Minister Viktor Chernomyrdin, who met leaders to push for the amendments, said debate on the fourth and final reading of the 1998 budget was rescheduledfor Friday to give lawmakers time to review the changes.

 

But at the end of the day, the committee issued a non-binding recommendation to reject a last-minute government amendment that all but reversed extra spending voted by the Duma at the third reading.

This may mean little more than irritation for ministers. After months of haggling, parliamentary leaders say they are ready to pass a budget and figures on both sides of the argument say there is more tactical manoeuvring than head-on conflict.

The committee accepted nine other government amendments in full or in part, some intended to adapt to changed economic circumstances since the budget was drafted last summer.

Finance Minister Mikhail Zadornov repeated a warning after the committee vote that Yeltsin might veto any bill that lacks key amendments. And meanwhile, state finances are being run on the basis of last years budget.

Yet the setback came awkwardly as Chernomyrdin met International Monetary Fund managing director Michel Camdessus to discuss further disbursements of a $9.2 billion credit.

The IMF is looking for evidence Russia is putting its budgetary affairs in order after a poor record on tax collection which has led to several delays in paying out IMF loans.

Chernomyrdin, quoted by Itar-Tass news agency after meeting Camdessus, said: I think Russia and the IMFs 1998 cooperation programme will be adopted.

But Tass later quoted an unnamed Russian source saying the talks were, in fact, going badly as the IMF demanded more market de-regulation, notably in the oil and car industries.

The talks are proving difficult, there is a mass of problems, the Russian source said. The working group is striving to find a compromise during the night.

Yeltsin and the government had some good news on another key element of market reforms when the upper house of parliament, the Federation Council, failed to muster enough votes to overturn Yeltsins veto of a Duma-amended draft land code.

Yeltsin wants to end Soviet-era controls on trading land to reinvigorate Russias farms but the opposition-dominated Duma, backed by some regional leaders who make up the Federation Council, had amended his original draft to reinstate extensive bureaucratic restrictions.

Ministers can now go back and present their own land code.

Yeltsin himself seemed to be taking things easy after his annual state of the nation address on Tuesday. The 67-year-old leader worked at his Gorky-9 country retreat outside Moscow.

Having played a vocal role in opposing threatened U.S. military strikes against Iraq, Russia hailed plans for U.N. Secretary-General Kofi Annan to visit Baghdad in a bid to persuade Iraq to remove obstacles to U.N. arms inspections.

Yeltsins spokesman said it was vitally important.

Russian Foreign Minister Yevgeny Primakov, in Hungary, said diplomatic efforts to defuse the crisis seemed to be working.